Head to Head Contrast: Heartland Financial USA (NASDAQ:HTLF) and Luther Burbank (NASDAQ:LBC)

Luther Burbank (NASDAQ:LBC) and Heartland Financial USA (NASDAQ:HTLF) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, valuation, earnings, profitability, risk, analyst recommendations and dividends.

Earnings & Valuation

This table compares Luther Burbank and Heartland Financial USA’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Luther Burbank $230.19 million 2.69 $45.06 million $0.79 13.97
Heartland Financial USA $574.98 million 2.84 $117.00 million $3.52 12.66

Heartland Financial USA has higher revenue and earnings than Luther Burbank. Heartland Financial USA is trading at a lower price-to-earnings ratio than Luther Burbank, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

21.7% of Luther Burbank shares are held by institutional investors. Comparatively, 51.3% of Heartland Financial USA shares are held by institutional investors. 20.8% of Luther Burbank shares are held by insiders. Comparatively, 6.1% of Heartland Financial USA shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings for Luther Burbank and Heartland Financial USA, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Luther Burbank 0 1 1 0 2.50
Heartland Financial USA 0 0 1 0 3.00

Luther Burbank currently has a consensus target price of $12.00, suggesting a potential upside of 8.70%. Heartland Financial USA has a consensus target price of $53.00, suggesting a potential upside of 18.91%. Given Heartland Financial USA’s stronger consensus rating and higher possible upside, analysts plainly believe Heartland Financial USA is more favorable than Luther Burbank.

Profitability

This table compares Luther Burbank and Heartland Financial USA’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Luther Burbank 17.97% 7.94% 0.67%
Heartland Financial USA 23.19% 10.37% 1.23%

Risk and Volatility

Luther Burbank has a beta of 1.15, suggesting that its share price is 15% more volatile than the S&P 500. Comparatively, Heartland Financial USA has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Dividends

Luther Burbank pays an annual dividend of $0.23 per share and has a dividend yield of 2.1%. Heartland Financial USA pays an annual dividend of $0.72 per share and has a dividend yield of 1.6%. Luther Burbank pays out 29.1% of its earnings in the form of a dividend. Heartland Financial USA pays out 20.5% 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. Heartland Financial USA has increased its dividend for 2 consecutive years.

Summary

Heartland Financial USA beats Luther Burbank on 12 of the 16 factors compared between the two stocks.

Luther Burbank Company Profile

Luther Burbank Corporation operates as the bank holding company for Luther Burbank Savings that provides various banking products and services for real estate investors, professionals, entrepreneurs, high net worth individuals, and commercial businesses. The company offers interest and noninterest-bearing transaction accounts, certificates of deposit, and money market accounts. It also provides commercial real estate loans, including first mortgage loans for the purchase, refinance, or build-out of tenant improvements on investor owned multifamily residential properties, as well as loans for the purchase, refinance, or improvement of office, retail, and light industrial properties; single family residential loans; and mortgage products, such as a portfolio of 30-year fixed rate first mortgage and a forgivable second mortgage. In addition, the company offers ATM machines, debit cards, and online and mobile banking services; engages in the real estate investment and equal housing lending activities; and issues trust preferred securities. As of January 28, 2019, it had operations in California, Oregon, and Washington through nine branches in California; 1 branch in Washington; and 9 lending offices located throughout the market area, including Santa Rosa, Los Angeles, San Francisco, San Jose, San Diego, and Seattle. The company was founded in 1983 and is headquartered in Santa Rosa, California.

Heartland Financial USA Company Profile

Heartland Financial USA, Inc., a multi-bank holding company, provides commercial, small business, and consumer banking services to individuals and businesses in the United States. It accepts various deposit products, including checking and other demand deposit accounts, NOW accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts, health savings accounts, and other time deposits. The company also offers commercial and industrial loans; commercial real estate loans; real estate mortgage loans; small business loans; agricultural loans; consumer loans comprising motor vehicle loans, home improvement loans, home equity line of credit, and fixed rate home equity and personal lines of credit; and credit cards for commercial, business, and personal use. In addition, it provides online banking, mobile banking, telephone banking, bill payment, automated clearing house, wire transfer, zero balance account, transaction reporting, lock box, remote deposit capture, accounts receivable, investment sweep account, reconciliation, treasury management, foreign exchange, and various fraud prevention services, as well as commercial purchasing and merchant credit cards, debit cards, and automated teller machines. Further, the company offers investment services, such as mutual funds, annuities, retirement products, education savings products, brokerage services, employer sponsored plans, and insurance products, as well as vehicle, property and casualty, and life and disability insurance products. Additionally, it is involved in the community development, consumer finance, multi-line insurance agency, and property management businesses. The company operates through a network of 119 banking locations in Iowa, Illinois, Wisconsin, New Mexico, Arizona, Montana, Colorado, Minnesota, Kansas, Missouri, Texas, and California. Heartland Financial USA, Inc. was founded in 1981 and is headquartered in Dubuque, Iowa.

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