Heritage Financial (NASDAQ:HFWA) and Flagstar Financial (NYSE:FLG) Financial Comparison

Flagstar Financial (NYSE:FLG) and Heritage Financial (NASDAQ:HFWA) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, risk, dividends, analyst recommendations, earnings and valuation.

Volatility and Risk

Flagstar Financial has a beta of 1.05, indicating that its share price is 5% more volatile than the S&P 500. Comparatively, Heritage Financial has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Valuation & Earnings

This table compares Flagstar Financial and Heritage Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Flagstar Financial	$8.20 billion	0.54	-$79.00 million	($4.36)	-2.43
Heritage Financial	$210.51 million	4.30	$61.76 million	$1.08	24.52

Heritage Financial has lower revenue, but higher earnings than Flagstar Financial. Flagstar Financial is trading at a lower price-to-earnings ratio than Heritage Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Flagstar Financial and Heritage Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Flagstar Financial	0	1	0	0	2.00
Heritage Financial	0	2	2	0	2.50

Flagstar Financial currently has a consensus target price of $12.00, indicating a potential upside of 13.21%. Heritage Financial has a consensus target price of $25.00, indicating a potential downside of 5.59%. Given Flagstar Financial’s higher possible upside, equities analysts plainly believe Flagstar Financial is more favorable than Heritage Financial.

Profitability

This table compares Flagstar Financial and Heritage Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Flagstar Financial	-18.40%	-11.35%	-0.78%
Heritage Financial	12.27%	7.01%	0.84%

Dividends

Flagstar Financial pays an annual dividend of $0.04 per share and has a dividend yield of 0.4%. Heritage Financial pays an annual dividend of $0.92 per share and has a dividend yield of 3.5%. Flagstar Financial pays out -0.9% of its earnings in the form of a dividend. Heritage Financial pays out 85.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Heritage Financial has raised its dividend for 13 consecutive years. Heritage Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

67.9% of Flagstar Financial shares are owned by institutional investors. Comparatively, 78.3% of Heritage Financial shares are owned by institutional investors. 6.4% of Flagstar Financial shares are owned by insiders. Comparatively, 1.8% of Heritage Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Heritage Financial beats Flagstar Financial on 12 of the 17 factors compared between the two stocks.

About Flagstar Financial

Flagstar Financial, Inc. operates as the bank holding company for Flagstar Bank, N.A. that provides banking products and services in the United States. The company’s deposit products include interest-bearing checking and money market, savings, non-interest-bearing, and retirement accounts, as well as certificates of deposit. Its loan products comprise multi-family loans; commercial real estate loans; acquisition, development, and construction loans; commercial and industrial loans; one-to-four family loans; specialty finance loans and leases; warehouse loans; and other loans, such as home equity lines of credit, boat and recreational vehicle indirect lending, point of sale consumer loans, and other consumer loans, including overdraft loans. The company offers cash management products; non-deposit investment and insurance products; and online banking, mobile banking, and bank-by-phone services. It primarily serves individuals, small and mid-size businesses, and professional associations. The company was formerly known as New York Community Bancorp, Inc. and changed its name to Flagstar Financial, Inc. in October 2024. Flagstar Financial, Inc. was founded in 1859 and is headquartered in Hicksville, New York.

About Heritage Financial

Heritage Financial Corporation operates as the bank holding company for Heritage Bank that provides various financial services to small and medium sized businesses and individuals in the United States. It accepts various deposit products, such as noninterest demand deposits, interest bearing demand deposits, money market accounts, savings accounts, personal checking accounts, and certificates of deposit. The company’s loan portfolio includes commercial and industrial loans, owner-occupied and non-owner occupied commercial real estate loans, one-to-four family residential loans, real estate construction and land development loans, consumer loans, commercial business loans, lines of credit, term equipment financing, and term real estate loans, as well as commercial business loans to a range of businesses in industries that include real estate and rental and leasing, healthcare, accommodation and food services, retail trade, and construction. It also originates loans that are guaranteed by the U.S. Small Business Administration; and provides objective advice from trusted advisers. The company was formerly known as Heritage Financial Corporation, M.H.C. and changed its name to Heritage Financial Corporation in 1998. Heritage Financial Corporation was founded in 1927 and is headquartered in Olympia, Washington.