Comparing Meridian Bank (NASDAQ:MRBK) & Magyar Bancorp (NASDAQ:MGYR)

Meridian Bank (NASDAQ:MRBK) and Magyar Bancorp (NASDAQ:MGYR) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

58.6% of Meridian Bank shares are held by institutional investors. Comparatively, 46.3% of Magyar Bancorp shares are held by institutional investors. 14.4% of Meridian Bank shares are held by insiders. Comparatively, 11.1% of Magyar Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Meridian Bank and Magyar Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meridian Bank	0	0	3	0	3.00
Magyar Bancorp	0	1	0	0	2.00

Meridian Bank presently has a consensus target price of $22.00, suggesting a potential upside of 7.32%. Given Meridian Bank’s stronger consensus rating and higher possible upside, research analysts clearly believe Meridian Bank is more favorable than Magyar Bancorp.

Dividends

Meridian Bank pays an annual dividend of $0.56 per share and has a dividend yield of 2.7%. Magyar Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. Meridian Bank pays out 29.6% of its earnings in the form of a dividend. Magyar Bancorp pays out 23.1% 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. Magyar Bancorp has raised its dividend for 3 consecutive years.

Valuation and Earnings

This table compares Meridian Bank and Magyar Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meridian Bank	$205.49 million	1.19	$21.84 million	$1.89	10.85
Magyar Bancorp	$58.42 million	1.94	$9.76 million	$1.73	10.11

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

Risk & Volatility

Meridian Bank has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Magyar Bancorp has a beta of 0.23, meaning that its share price is 77% less volatile than the S&P 500.

Profitability

This table compares Meridian Bank and Magyar Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meridian Bank	10.63%	11.81%	0.86%
Magyar Bancorp	16.25%	9.18%	1.07%

Summary

Meridian Bank beats Magyar Bancorp on 12 of the 17 factors compared between the two stocks.

About Meridian Bank

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.

About Magyar Bancorp

Magyar Bancorp, Inc. operates as the holding company for Magyar Bank that provides various consumer and commercial banking services to individuals, businesses, and nonprofit organizations in New Jersey, the United States. It accepts various deposit accounts, including demand, savings, NOW, money market, and retirement accounts, as well as certificates of deposit. The company also provides residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans, and construction loans, as well as small business administration loans. In addition, it offers non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers; and buys, sells, and holds investment securities. The company has branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. Magyar Bancorp, Inc. was founded in 1922 and is headquartered in New Brunswick, New Jersey.