Flushing Financial (NASDAQ:FFIC) & Northeast Bancorp (NASDAQ:NBN) Critical Review

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

Valuation and Earnings

This table compares Northeast Bancorp and Flushing Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$351.00 million	2.83	$83.44 million	$10.37	11.66
Flushing Financial	$489.63 million	1.10	$18.88 million	$0.54	29.39

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Northeast Bancorp and Flushing Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	2	0	2.67
Flushing Financial	0	4	0	0	2.00

Northeast Bancorp currently has a consensus target price of $117.50, indicating a potential downside of 2.86%. Flushing Financial has a consensus target price of $16.80, indicating a potential upside of 5.86%. Given Flushing Financial’s higher probable upside, analysts plainly believe Flushing Financial is more favorable than Northeast Bancorp.

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Flushing Financial pays an annual dividend of $0.88 per share and has a dividend yield of 5.5%. Northeast Bancorp pays out 0.4% of its earnings in the form of a dividend. Flushing Financial pays out 163.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider and Institutional Ownership

67.1% of Flushing Financial shares are owned by institutional investors. 14.2% of Northeast Bancorp shares are owned by insiders. Comparatively, 5.7% of Flushing Financial shares are owned by 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 Northeast Bancorp and Flushing Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	24.16%	17.34%	1.98%
Flushing Financial	3.86%	5.95%	0.48%

Volatility & Risk

Northeast Bancorp has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Flushing Financial has a beta of 0.79, meaning that its share price is 21% less volatile than the S&P 500.

Summary

Northeast Bancorp beats Flushing Financial on 10 of the 16 factors compared between the two stocks.

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.

About Flushing Financial

Flushing Financial Corporation operates as the bank holding company for Flushing Bank that provides banking products and services primarily to consumers, businesses, and governmental units. It offers various deposit products, including checking and savings accounts, money market accounts, non-interest bearing demand accounts, NOW accounts, and certificates of deposit. The company also provides mortgage loans secured by multi-family residential, commercial real estate, one-to-four family mixed-use property, one-to-four family residential property, and commercial business loans; construction loans; small business administration loans and other small business loans; mortgage loan surrogates, such as mortgage-backed securities; and consumer loans, including overdraft lines of credit, as well as the United States government securities, corporate fixed-income securities, and other marketable securities. It operates full-service banking offices in Queens, Nassau, Suffolk, Kings, and New York counties, New York; and an internet branch under the iGObanking and BankPurely brands. Flushing Financial Corporation was founded in 1929 and is based in Uniondale, New York.