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Relative valuation derived from Financials sector median benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Multiples adjusted for extreme outliers and non-recurring volatility.
Auditing capital efficiency...
Quality Profile Audit
Score: 52.1GRADE C+
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation.
Return on Equity
Profit generated per dollar of shareholder equity
6.7%
Sector: 8.5%
Dividend Analysis audit
INCOME
3.88%
Trailing Yield
$3.88
Per $100 Invested
Solid dividend yield for income-focused strategies.
Est. Payout Ratio
56%SAFE
Analyst Projections
Analyst Consensus
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Based on our 6-factor quantitative model, Waterstone Financial, Inc. (WSBF) receives a "Buy" rating with a composite score of 54.0/100, ranked #32 out of 4446 stocks. Key factor scores: Quality 52/100, Value 61/100, Momentum 58/100. This is quantitative analysis only — not investment advice.
Waterstone Financial, Inc. (WSBF) Stock Analysis — April 2026 Rating, Price, and Forecast
Company Overview — What Does Waterstone Financial, Inc. Do?
Waterstone Financial, Inc. operates as a bank holding company for WaterStone Bank SSB that provides various financial services to customers in southeastern Wisconsin, the United States. It operates in two segments, Community Banking and Mortgage Banking. The Community Banking segment offers consumer and business banking products and services, such as deposit and transactional solutions, including checking accounts, online banking and bill pay services, money transfer services, as well as credit, debit, and pre-paid cards; investable funds solutions comprising savings, money market deposits, individual retirement accounts, and certificates of deposit; residential mortgages, home equity loans and lines of credit, personal and installment loans, real estate financing, business loans, and business lines of credit; and fixed and variable annuities, insurance products, and trust and investment management accounts. It also provides transaction deposits, interest bearing transaction accounts, demand deposits, non-interest-bearing demand accounts, and time deposits; secured and unsecured lines; commercial real estate construction loans; term loans for working capital, inventory, and general corporate use; and personal term loans and investment services. The Mortgage Banking segment offers residential mortgage loans for the purpose of sale in the secondary market. The company also invests in a portfolio of securities include mortgage-backed securities, government-sponsored and private-label enterprise bonds, collateralized mortgage and municipal obligations, and other debt securities. It operates 14 full-service banking offices, 1 drive-through office, and 14 automated teller machines located in Milwaukee, Washington, and Waukesha Counties, Wisconsin. The company was formerly known as Wauwatosa Holdings, Inc. and changed its name to Waterstone Financial, Inc. in August 2008. Waterstone Financial, Inc. was founded in 1921 and is based in Wauwatosa, Wisconsin. Waterstone Financial, Inc. (WSBF) is classified as a small-cap stock in the Financials sector, specifically within the Banking industry. The company is led by CEO William F. Bruss and employs approximately 600 people. With a market capitalization of $335M, WSBF is one of the notable companies in the Financials sector.
Waterstone Financial, Inc. (WSBF) Stock Rating — Buy (April 2026)
As of April 2026, Waterstone Financial, Inc. receives a Buy rating with a composite score of 54.0/100 and 4 out of 5 stars from the Blank Capital Research quantitative model.WSBF ranks #32 out of 4,446 stocks in our coverage universe. Within the Financials sector, Waterstone Financial, Inc. ranks #19 of 891 stocks, placing it in the top 10% of its Financials peers. The rating is generated by a multi-factor model that weighs quality (30%), momentum (25%), value (15%), investment (10%), stability (10%), and short interest (10%).
WSBF Stock Price and 52-Week Range
Waterstone Financial, Inc. (WSBF) currently trades at $18.55. The stock lost $0.21 (1.1%) in the most recent trading session. The 52-week high for WSBF is $18.88, which means the stock is currently trading -1.7% from its annual peak. The 52-week low is $11.61, putting the stock 59.8% above its annual trough. Recent trading volume was 67K shares, suggesting relatively thin trading activity.
Is WSBF Overvalued or Undervalued? — Valuation Analysis
Waterstone Financial, Inc. (WSBF) carries a value factor score of 61/100 in the Blank Capital model, indicating fair valuation relative to historical norms. The trailing price-to-earnings ratio is 14.39x, compared to the Financials sector average of 14.88x — a discount of 3%. The price-to-book ratio stands at 0.96x, versus the sector average of 1.22x. The price-to-sales ratio is 2.92x, compared to 0.90x for the average Financials stock. On an enterprise value basis, WSBF trades at 25.59x EV/EBITDA, versus 3.26x for the sector.
Overall, WSBF's valuation appears roughly in line with sector benchmarks, suggesting the market is pricing the stock fairly given its current fundamentals and growth trajectory. Neither deep value nor significantly overpriced, the stock occupies a middle ground on valuation.
Waterstone Financial, Inc. Profitability — ROE, Margins, and Quality Score
Waterstone Financial, Inc. (WSBF) earns a quality factor score of 52/100, indicating solid business quality with consistent operational execution. The return on equity (ROE) is 6.7%, compared to the Financials sector average of 8.5%, which is below typical expectations for high-quality companies. Return on assets (ROA) comes in at 1.0% versus the sector average of 1.2%.
On a margin basis, Waterstone Financial, Inc. reports gross margins of 0.0%. The operating margin is 25.3% (sector: 21.8%). Net profit margin stands at 20.2%, versus 17.7% for the average Financials stock. Revenue growth is running at 5.5% on a trailing basis, compared to 9.4% for the sector. The overall profitability profile is adequate, though there may be room for margin expansion.
WSBF Debt, Balance Sheet, and Financial Health
Waterstone Financial, Inc. has a debt-to-equity ratio of 118.0%, compared to the Financials sector average of 121.0%. Leverage is within a manageable range for the industry, though investors should monitor debt trends over time. The current ratio is 1.18x, suggesting adequate working capital coverage. Total debt on the balance sheet is $412M. Cash and equivalents stand at $50M.
WSBF has a beta of 0.50, meaning it is less volatile than the S&P 500, making it a relatively defensive holding. The stability factor score for Waterstone Financial, Inc. is 89/100, indicating low-volatility characteristics and consistent price behavior that appeals to risk-averse investors.
Waterstone Financial, Inc. Revenue and Earnings History — Quarterly Trend
In TTM 2026, Waterstone Financial, Inc. reported revenue of $115M and earnings per share (EPS) of $1.48. Net income for the quarter was $23M. Gross margin was 0.0%. Operating income came in at $29M.
In FY 2025, Waterstone Financial, Inc. reported revenue of $116M and earnings per share (EPS) of $1.48. Net income for the quarter was $26M. Revenue grew 2.6% year-over-year compared to FY 2024. Operating income came in at $33M.
In Q3 2025, Waterstone Financial, Inc. reported revenue of $30M and earnings per share (EPS) of $0.45. Net income for the quarter was $8M. Revenue grew 1.3% year-over-year compared to Q3 2024. Operating income came in at $10M.
In Q2 2025, Waterstone Financial, Inc. reported revenue of $29M and earnings per share (EPS) of $0.43. Net income for the quarter was $8M. Revenue grew 2.4% year-over-year compared to Q2 2024. Operating income came in at $10M.
Over the past 8 quarters, Waterstone Financial, Inc. has demonstrated a growth trajectory, with revenue expanding from $28M to $115M. Investors analyzing WSBF stock should weigh these quarterly trends alongside the valuation and quality metrics discussed above.
WSBF Dividend Yield and Income Analysis
Waterstone Financial, Inc. (WSBF) currently pays a dividend yield of 3.9%. At this yield, a $10,000 investment in WSBF stock would generate approximately $$388.00 in annual dividend income. This compares to the Financials sector average dividend yield of 2.5%, meaning WSBF offers above-average income for its sector. With a net margin of 20.2%, the dividend appears well-covered by earnings, suggesting sustainable payouts going forward.
WSBF Momentum and Technical Analysis Profile
Waterstone Financial, Inc. (WSBF) has a momentum factor score of 58/100, reflecting neutral trend characteristics. The stock is neither significantly outperforming nor underperforming the broader market on a momentum basis. The investment factor score is 31/100, which measures capital allocation efficiency and asset growth patterns. The short interest score of 27/100 signals elevated short interest, which can indicate bearish sentiment among institutional investors.
WSBF vs Competitors — Financials Sector Ranking and Peer Comparison
Comparing WSBF against the S&P 500 benchmark is also instructive for understanding relative performance. Investors can view the full WSBF vs S&P 500 (SPY) comparison to assess how Waterstone Financial, Inc. stacks up against the broader market across all factor dimensions.
WSBF Next Earnings Date
No upcoming earnings date has been announced for Waterstone Financial, Inc. (WSBF) at this time. Check the earnings calendar for the latest scheduling updates across all stocks in our coverage universe.
Should You Buy WSBF? — Investment Thesis Summary
The bull case for Waterstone Financial, Inc. rests on several quantitative strengths. The value score of 61/100 suggests attractive pricing relative to fundamentals. Low volatility (stability score 89/100) reduces downside risk.
In summary, Waterstone Financial, Inc. (WSBF) earns a Buy rating with a composite score of 54.0/100 as of April 2026. The rating is derived from the Blank Capital Research methodology, which combines six factor dimensions into a single quantitative ranking. Investors should consider these quantitative signals alongside their own fundamental research, risk tolerance, and investment time horizon before making buy or sell decisions on WSBF stock.
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Institutional Research Dossier
Waterstone Financial, Inc. (WSBF) Deep Dive Analysis
Published on March 24, 2026
Action RatingBuy
Sections
Executive Summary
We initiate coverage on Waterstone Financial, Inc. (WSBF) with a Buy rating. This rating is primarily driven by the company's attractive valuation relative to its peers, its strong stability metrics, and its consistent profitability. While growth prospects are moderate, the current market price does not adequately reflect the company's demonstrated ability to generate free cash flow and maintain healthy operating margins, making it an appealing investment opportunity.
The most critical takeaway is that WSBF presents a compelling value proposition within the banking sector. Its focus on community banking and mortgage banking in southeastern Wisconsin provides a stable revenue base, and its conservative approach to risk management, as evidenced by its high stability score, offers downside protection in uncertain economic environments. The combination of value and stability makes WSBF a worthwhile addition to a diversified portfolio.
Business Strategy & Overview
Waterstone Financial operates through two primary segments: Community Banking and Mortgage Banking. The Community Banking segment, the core of WSBF's operations, focuses on providing traditional banking products and services to individuals and businesses in southeastern Wisconsin. This includes deposit accounts, loans (residential mortgages, home equity, personal, and business), and investment services. The strategy here is to build long-term relationships with customers by offering personalized service and competitive rates. This localized approach allows WSBF to understand the specific needs of its community and tailor its offerings accordingly.
The Mortgage Banking segment originates residential mortgage loans for sale in the secondary market. This segment provides a source of fee income and allows WSBF to capitalize on fluctuations in interest rates and housing market activity. However, it also introduces volatility, as mortgage origination volumes are sensitive to changes in the macroeconomic environment. WSBF's strategy in this segment is to maintain a disciplined approach to underwriting and risk management, ensuring that the loans it originates are of high quality and can be sold profitably.
WSBF's overall strategic positioning is that of a community-focused bank with a diversified revenue stream. By combining traditional banking services with mortgage origination, WSBF aims to achieve sustainable growth and profitability. The company's emphasis on serving the southeastern Wisconsin market provides a degree of insulation from national economic trends, while its mortgage banking operations allow it to participate in the broader housing market. The company operates 14 full-service banking offices, 1 drive-through office, and 14 automated teller machines located in Milwaukee, Washington, and Waukesha Counties, Wisconsin.
The industry context is characterized by increasing competition from larger national banks and fintech companies. WSBF faces the challenge of maintaining its market share in the face of these competitive pressures. To address this challenge, WSBF is investing in technology to improve its online banking and mobile banking offerings, while also continuing to emphasize its personalized service and community relationships. The company's ability to adapt to changing customer preferences and technological advancements will be crucial to its long-term success.
Execution Benchmarks audit
Revenue Growth
YOY expansion rate
5.5%
Sector: 9.4%
-42% VS SCTR
Economic Moat Analysis
Waterstone Financial possesses a narrow economic moat, primarily derived from its established presence and reputation within its local market of southeastern Wisconsin. This moat is not particularly wide due to the commoditized nature of banking services and the increasing competition from larger institutions and online lenders. However, WSBF benefits from a degree of customer loyalty and brand recognition within its community, which provides a slight competitive edge.
One potential source of a moat is switching costs. While switching banks is not inherently difficult, the process can be time-consuming and inconvenient, particularly for businesses with complex financial needs. WSBF's focus on building long-term relationships with its customers can increase these switching costs, as customers may be reluctant to leave a bank that understands their specific needs and provides personalized service. However, these switching costs are not insurmountable, and customers can easily switch to a competitor if they find a better deal or a more convenient service.
Another potential source of a moat is intangible assets, specifically WSBF's brand reputation within its local market. The company has been operating in southeastern Wisconsin for over a century, and it has built a strong reputation for reliability and community involvement. This reputation can attract new customers and retain existing ones. However, brand reputation is difficult to quantify and can be easily damaged by negative publicity or poor customer service.
Efficient scale is not a significant factor in WSBF's moat. While larger banks may benefit from economies of scale, WSBF's focus on community banking allows it to operate efficiently at a smaller scale. The company's ability to tailor its services to the specific needs of its local market can offset the cost advantages of larger competitors. However, WSBF may face challenges in competing with larger banks on price, as it may not be able to offer the same low rates and fees.
Overall, WSBF's narrow moat provides a modest degree of protection from competition. The company's established presence, customer relationships, and brand reputation give it a slight competitive edge. However, the company must continue to invest in its technology and customer service to maintain its market share in the face of increasing competition. The moat is vulnerable to erosion if WSBF fails to adapt to changing customer preferences or if it experiences a decline in its reputation.
Financial Health & Profitability
Waterstone Financial demonstrates a solid financial profile, characterized by consistent profitability and a healthy balance sheet. The company's revenue has shown steady growth, increasing from $99.21 million in FY2023 to $116.11 million in FY2025. This growth is primarily driven by the company's Community Banking segment, which benefits from a stable customer base and increasing loan demand. The Mortgage Banking segment also contributes to revenue growth, although its performance is more volatile due to fluctuations in interest rates and housing market activity.
WSBF's profitability is also strong, with a net margin of 20.2% for the trailing twelve months (TTM). This is higher than the sector average of 17.8%, indicating that WSBF is more efficient at converting revenue into profit than its peers. The company's operating margin is also healthy, at 25.3% for the TTM period, compared to the sector average of 22.0%. The quarterly financial history shows a consistent trend of positive net income and operating margins, indicating that WSBF is able to maintain its profitability even in challenging economic conditions.
The company's return on equity (ROE) of 6.7% is slightly below the sector average of 8.5%. This suggests that WSBF could improve its efficiency in utilizing equity to generate profits. However, the company's ROE is still respectable and reflects its conservative approach to risk management. The company's debt-to-equity ratio of 118.00 is slightly higher than the sector average of 115.00, indicating that WSBF is more leveraged than its peers. However, the company's current ratio of 1.18 suggests that it has sufficient liquid assets to meet its short-term obligations.
Free cash flow generation is a key strength of WSBF. The company generated $95.50 million in free cash flow for the TTM period. This strong cash flow allows WSBF to invest in its business, pay dividends, and repurchase shares. The company's total cash balance of $50.08 million provides a cushion against unexpected expenses and allows it to pursue strategic opportunities. Overall, WSBF's financial health is sound, with consistent profitability, strong cash flow generation, and a healthy balance sheet. The company's conservative approach to risk management provides downside protection in uncertain economic environments.
Valuation Assessment
Waterstone Financial's valuation presents an attractive entry point based on several key metrics. The company's price-to-earnings (P/E) ratio of 12.0x is significantly lower than the sector average of 15.5x, suggesting that the stock is undervalued relative to its peers. This discount may be due to the company's smaller size and lower growth prospects compared to larger national banks. However, the company's consistent profitability and strong cash flow generation warrant a higher valuation.
The company's enterprise value-to-EBITDA (EV/EBITDA) ratio of 5.5x is higher than the sector average of 3.5x. This suggests that the company may be overvalued on an EV/EBITDA basis. However, EV/EBITDA can be skewed by debt levels, and WSBF's higher debt-to-equity ratio may be contributing to the higher EV/EBITDA multiple. Furthermore, the company's strong free cash flow generation may not be fully reflected in the EV/EBITDA ratio.
Given the company's strong free cash flow of $95.50 million and a market cap of $326.81 million, the company has a high free cash flow yield. This indicates that the company is generating a significant amount of cash relative to its market value, which is attractive to investors. The company's consistent profitability and strong cash flow generation provide a solid foundation for future growth and shareholder returns.
Overall, WSBF's valuation is attractive based on its P/E ratio and free cash flow yield. While the EV/EBITDA ratio is slightly higher than the sector average, this may be due to the company's higher debt levels and strong cash flow generation. The company's consistent profitability and conservative approach to risk management warrant a higher valuation. We believe that the current market price does not adequately reflect the company's intrinsic value, making it an appealing investment opportunity.
Risk & Uncertainty
Waterstone Financial faces several risks that could impact its financial performance and valuation. One of the primary risks is interest rate risk. As a bank, WSBF's profitability is sensitive to changes in interest rates. A rising interest rate environment could increase the company's borrowing costs and reduce its net interest margin. Conversely, a falling interest rate environment could reduce the company's lending income and compress its net interest margin. The company attempts to manage this risk through hedging strategies, but these strategies may not be fully effective.
Another risk is credit risk. WSBF's loan portfolio is exposed to the risk of borrowers defaulting on their loans. This risk is particularly relevant in the Mortgage Banking segment, where loan origination volumes are sensitive to changes in the macroeconomic environment. A recession or a decline in housing prices could lead to an increase in loan defaults and a decrease in the value of the company's loan portfolio. The company attempts to mitigate this risk through careful underwriting and loan diversification, but these measures may not be sufficient to prevent losses in a severe economic downturn.
Competition is also a significant risk. WSBF faces increasing competition from larger national banks and fintech companies. These competitors may have lower costs of capital and more advanced technology, which could allow them to offer lower rates and fees and provide a more convenient customer experience. WSBF's ability to compete effectively will depend on its ability to invest in technology, maintain its personalized service, and build strong customer relationships.
Regulatory risk is another factor to consider. The banking industry is heavily regulated, and changes in regulations could impact WSBF's profitability and operations. For example, changes in capital requirements or lending regulations could increase the company's costs and reduce its ability to lend. The company must comply with a complex web of regulations, and failure to do so could result in fines and penalties.
Bulls Say / Bears Say
The Bull Case
BULL VIEWWaterstone Financial's conservative management and strong balance sheet provide downside protection in an uncertain economic environment, making it a safe haven investment.
BULL VIEWThe company's attractive valuation, with a P/E ratio below the sector average, offers significant upside potential as the market recognizes its intrinsic value.
BULL VIEWWSBF's focus on community banking and mortgage banking in southeastern Wisconsin provides a stable revenue base and insulates it from national economic trends.
The Bear Case
BEAR VIEWWaterstone Financial's relatively small size and limited geographic diversification make it vulnerable to competition from larger national banks and fintech companies.
BEAR VIEWThe company's higher debt-to-equity ratio compared to the sector average increases its financial risk and sensitivity to interest rate changes.
BEAR VIEWWSBF's ROE is below the sector average, indicating that it is not as efficient at utilizing equity to generate profits as its peers.
About the Author
Marques Blank
Founder & Chief Investment Officer, Blank Capital
Marques brings 15 years of institutional finance and investing experience, having overseen financial planning for a $1.6B defense business unit. He developed the proprietary 6-factor quantitative model used to score WSBF and 4,400+ other equities.
Waterstone Financial, Inc. exhibits a 221% valuation premium relative to institutional benchmarks. This represents a potential valuation overextension based on current multiples.
Return on Assets
Efficiency of asset utilization
1.0%
Sector: 1.2%
Gross Margin
Pricing power and cost efficiency
0.0%
Sector: 0.0%
Operating Margin
Core business profitability
25.3%
Sector: 21.8%
Net Margin
Bottom-line profitability
20.2%
Sector: 17.7%
Factor Methodology
The Quality factor evaluates the persistence and magnitude of cash flows. Companies with scores >70 exhibit superior competitive moats and financial resilience through economic cycles.
Sector Avg Yield2.48%
Yield Delta+56%
Income Projection audit
A $10,000 investment would generate approximately $388 annually in dividends at the current trailing rate.
