Head to Head Review: First Financial Northwest (NASDAQ:FFNW) and Cadence Bank (NYSE:CADE)

Cadence Bank (NYSE:CADE) and First Financial Northwest (NASDAQ:FFNW) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, analyst recommendations, institutional ownership, profitability and risk.

Dividends

Cadence Bank pays an annual dividend of $1.00 per share and has a dividend yield of 3.5%. First Financial Northwest pays an annual dividend of $0.52 per share and has a dividend yield of 2.5%. Cadence Bank pays out 31.9% of its earnings in the form of a dividend. First Financial Northwest pays out 157.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cadence Bank has increased its dividend for 13 consecutive years and First Financial Northwest has increased its dividend for 7 consecutive years. Cadence Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Cadence Bank	23.83%	8.97%	0.86%
First Financial Northwest	3.78%	1.94%	0.21%

Earnings & Valuation

This table compares Cadence Bank and First Financial Northwest’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cadence Bank	$2.19 billion	2.35	$542.30 million	$3.13	9.03
First Financial Northwest	$80.93 million	2.40	$6.30 million	$0.33	64.06

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

Risk & Volatility

Cadence Bank has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, First Financial Northwest has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Cadence Bank and First Financial Northwest, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cadence Bank	0	5	6	1	2.67
First Financial Northwest	0	2	1	0	2.33

Cadence Bank currently has a consensus price target of $31.09, suggesting a potential upside of 9.98%. First Financial Northwest has a consensus price target of $23.00, suggesting a potential upside of 8.80%. Given Cadence Bank’s stronger consensus rating and higher probable upside, research analysts clearly believe Cadence Bank is more favorable than First Financial Northwest.

Insider and Institutional Ownership

84.6% of Cadence Bank shares are held by institutional investors. Comparatively, 55.0% of First Financial Northwest shares are held by institutional investors. 2.2% of Cadence Bank shares are held by insiders. Comparatively, 7.2% of First Financial Northwest shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Cadence Bank beats First Financial Northwest on 15 of the 18 factors compared between the two stocks.

About Cadence Bank

Cadence Bank provides commercial banking and financial services. Its products and services include consumer banking, consumer loans, mortgages, home equity lines and loans, credit cards, commercial and business banking, treasury management, specialized and asset-based lending, commercial real estate, equipment financing, and correspondent banking services. The company's products and services also comprise small business administration lending, foreign exchange, wealth management, investment and trust, financial planning, retirement plan management, and personal and business insurance services. Cadence Bank was founded in 1876 and is headquartered in Tupelo, Mississippi.

About First Financial Northwest

First Financial Northwest, Inc. operates as the bank holding company for First Financial Northwest Bank that provides commercial banking services in Washington. The company offers a range of deposit products, including noninterest-bearing accounts, interest-bearing demand accounts, money market accounts, savings accounts, and certificates of deposit. Its loan products comprise one-to-four family residential loans; multifamily and commercial real estate loans; construction/land loans; business loans; and consumer loans, such as home equity loans, lines of credit, second mortgage term loans, auto loans, and savings account loans. The company also provides wealth management services; and online banking services, as well as debit cards and ATMs. The company was founded in 1923 and is headquartered in Renton, Washington.