Harleysville Financial (OTCMKTS:HARL) and Burke & Herbert Financial Services (NASDAQ:BHRB) Critical Analysis

Harleysville Financial (OTCMKTS:HARL) and Burke & Herbert Financial Services (NASDAQ:BHRB) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, risk, valuation, profitability, earnings, institutional ownership and dividends.

Earnings and Valuation

This table compares Harleysville Financial and Burke & Herbert Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Harleysville Financial	$36.54 million	2.21	$12.22 million	$2.85	7.81
Burke & Herbert Financial Services	$148.44 million	6.52	$22.69 million	$8.15	7.99

Burke & Herbert Financial Services has higher revenue and earnings than Harleysville Financial. Harleysville Financial is trading at a lower price-to-earnings ratio than Burke & Herbert Financial Services, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

1.2% of Harleysville Financial shares are owned by institutional investors. 14.5% of Harleysville Financial shares are owned by insiders. Comparatively, 9.7% of Burke & Herbert Financial Services shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Harleysville Financial and Burke & Herbert Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Harleysville Financial	0	0	0	0	N/A
Burke & Herbert Financial Services	0	1	0	0	2.00

Burke & Herbert Financial Services has a consensus price target of $73.00, suggesting a potential upside of 12.07%. Given Burke & Herbert Financial Services’ higher probable upside, analysts plainly believe Burke & Herbert Financial Services is more favorable than Harleysville Financial.

Profitability

This table compares Harleysville Financial and Burke & Herbert Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Harleysville Financial	25.16%	11.50%	1.15%
Burke & Herbert Financial Services	-1.10%	9.96%	0.85%

Dividends

Harleysville Financial pays an annual dividend of $1.24 per share and has a dividend yield of 5.6%. Burke & Herbert Financial Services pays an annual dividend of $2.12 per share and has a dividend yield of 3.3%. Harleysville Financial pays out 43.5% of its earnings in the form of a dividend. Burke & Herbert Financial Services pays out 26.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Burke & Herbert Financial Services beats Harleysville Financial on 7 of the 13 factors compared between the two stocks.

About Harleysville Financial

Harleysville Financial Corporation operates as the bank holding company for Harleysville Bank that provides various banking products and services in Pennsylvania. The company offers various deposit products, including savings, money market, and checking accounts, as well as certificates of deposits. It also provides consumer loans, including residential mortgages, savings account loans, and home equity line of credit, construction, and non-real estate consumer loans; and commercial loans, such as commercial mortgages, line of credit, and commercial business loans. In addition, the company offers online banking and bill payment, mobile and telephone banking, remote deposit, debit cards, automated clearing house processing, sweep accounts, zero balance accounts, employee services, and other cash management services. Further, it provides investment services, such as financial consultation, cash and wealth management, education planning, investment strategy, insurance, retirement and estate planning, financial and goal planning, and asset allocation services, as well as offers investment products, such as fixed and variable annuities, mutual funds, life insurances, stocks and bonds, tax-advantaged investments, long-term care insurances, disability insurances, retirement plans/individual retirement accounts, wrap accounts, and unit investment trusts. Its primary market area includes Montgomery County and Bucks County. The company was formerly known as Harleysville Savings Financial Corporation and changed its name to Harleysville Financial Corporation in May 2017. Harleysville Financial Corporation was founded in 1915 and is headquartered in Harleysville, Pennsylvania.

About Burke & Herbert Financial Services

Burke & Herbert Financial Services Corp. operates as the bank holding company for Burke & Herbert Bank & Trust Company that provides various community banking products and services in Virginia and Maryland. It offers consumer and commercial deposit products, such as digital banking, demand, negotiable order of withdrawal, money market, and savings accounts, as well as certificates of deposit. The company also provides loans, such as commercial real estate, single family residential, owner-occupied commercial real estate, residential mortgage, acquisition, construction and development, commercial and industrial, and consumer non-real estate and other loans. In addition, it offers treasury and cash management services; and online and mobile banking, and wealth and trust services. The company was founded in 1852 and is headquartered in Alexandria, Virginia.