Critical Contrast: HomeStreet (NASDAQ:HMST) and First Financial (NASDAQ:THFF)

HomeStreet (NASDAQ:HMST) and First Financial (NASDAQ:THFF) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.

Insider & Institutional Ownership

74.7% of HomeStreet shares are owned by institutional investors. Comparatively, 72.7% of First Financial shares are owned by institutional investors. 4.6% of HomeStreet shares are owned by company insiders. Comparatively, 3.7% of First Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares HomeStreet and First Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HomeStreet	-40.30%	-4.23%	-0.23%
First Financial	14.86%	8.10%	0.87%

Risk & Volatility

HomeStreet has a beta of 1.48, suggesting that its stock price is 48% more volatile than the S&P 500. Comparatively, First Financial has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Valuation and Earnings

This table compares HomeStreet and First Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HomeStreet	$358.19 million	0.53	-$27.51 million	($7.66)	-1.31
First Financial	$174.99 million	3.25	$60.67 million	$3.69	13.06

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

Analyst Recommendations

This is a breakdown of current ratings for HomeStreet and First Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HomeStreet	0	2	1	0	2.33
First Financial	0	1	1	0	2.50

HomeStreet currently has a consensus target price of $14.33, indicating a potential upside of 42.34%. First Financial has a consensus target price of $49.50, indicating a potential upside of 2.72%. Given HomeStreet’s higher possible upside, equities research analysts clearly believe HomeStreet is more favorable than First Financial.

Summary

First Financial beats HomeStreet on 8 of the 13 factors compared between the two stocks.

About HomeStreet

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services in the Western United States. The company offers personal and business checking, savings, interest-bearing negotiable order of withdrawal, and money market accounts, as well as certificates of deposit; credit cards; insurance; and treasury management services. Its loan products include commercial real estate (CRE), multifamily, construction and land development, owner occupied CRE and commercial business loans; and single family, home equity, and other loans. In addition, the company offers online, mobile, and telephone banking. It serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company operates through branches and ATMs. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.

About First Financial

First Financial Corporation, through its subsidiaries, provides various financial services. The company offers non-interest-bearing demand, interest-bearing demand, savings, time, and other time deposits. It also provides commercial loans primarily to expand a business or finance asset purchases; residential real estate and residential real estate construction loans; and home equity loans and lines, secured loans, and cash/CD secured and unsecured loans. In addition, the company offers lease financing, trust account, depositor, and insurance services. The company was founded in 1834 and is headquartered in Terre Haute, Indiana.