Financial Analysis: First Financial Northwest (NASDAQ:FFNW) and State Street (NYSE:STT)

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for First Financial Northwest and State Street, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Financial Northwest	0	2	1	0	2.33
State Street	2	6	4	0	2.17

First Financial Northwest currently has a consensus target price of $23.00, indicating a potential upside of 11.87%. State Street has a consensus target price of $81.83, indicating a potential upside of 5.84%. Given First Financial Northwest’s stronger consensus rating and higher probable upside, analysts plainly believe First Financial Northwest is more favorable than State Street.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Financial Northwest	7.79%	3.95%	0.41%
State Street	10.59%	11.86%	0.90%

Dividends

First Financial Northwest pays an annual dividend of $0.52 per share and has a dividend yield of 2.5%. State Street pays an annual dividend of $2.76 per share and has a dividend yield of 3.6%. First Financial Northwest pays out 76.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. State Street pays out 50.3% of its earnings in the form of a dividend. First Financial Northwest has increased its dividend for 7 consecutive years and State Street has increased its dividend for 12 consecutive years. State Street is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

First Financial Northwest has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, State Street has a beta of 1.52, suggesting that its stock price is 52% more volatile than the S&P 500.

Institutional & Insider Ownership

55.0% of First Financial Northwest shares are held by institutional investors. Comparatively, 87.4% of State Street shares are held by institutional investors. 8.0% of First Financial Northwest shares are held by insiders. Comparatively, 0.3% of State Street 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.

Earnings and Valuation

This table compares First Financial Northwest and State Street’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Financial Northwest	$80.93 million	2.33	$6.30 million	$0.68	30.24
State Street	$18.37 billion	1.27	$1.94 billion	$5.49	14.08

State Street has higher revenue and earnings than First Financial Northwest. State Street 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.

Summary

State Street beats First Financial Northwest on 12 of the 17 factors compared between the two stocks.

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, statement 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 for the construction of single-family residences, condominiums, townhouses, multifamily properties, and residential developments; business loans; and consumer loans, such as home equity loans and savings account loans. The company also provides wealth management services; and online banking platform, as well as debit cards and ATMs. It operates retail branches in King County, Snohomish County, and Pierce County, Washington. The company was founded in 1923 and is headquartered in Renton, Washington.

About State Street

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody, accounting, regulatory reporting, investor, and performance and analytics; middle office products, such as IBOR, transaction management, loans, cash, derivatives and collateral, record keeping, and client reporting and investment analytics; finance leasing; foreign exchange, and brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded funds under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds, UCITS, hedge funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.