Financial Review: M&F Bancorp (OTCMKTS:MFBP) versus Trustmark (NASDAQ:TRMK)

Trustmark (NASDAQ:TRMK) and M&F Bancorp (OTCMKTS:MFBP) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, valuation, analyst recommendations, dividends, risk, institutional ownership and earnings.

Earnings and Valuation

This table compares Trustmark and M&F Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trustmark	$1.12 billion	2.41	$224.13 million	$3.78	12.20
M&F Bancorp	$29.72 million	3.09	$4.30 million	$1.30	36.42

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

Insider & Institutional Ownership

67.6% of Trustmark shares are owned by institutional investors. 1.7% of Trustmark shares are owned by company insiders. Comparatively, 2.9% of M&F Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Trustmark and M&F Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trustmark	20.12%	10.74%	1.20%
M&F Bancorp	N/A	N/A	N/A

Dividends

Trustmark pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. M&F Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 0.5%. Trustmark pays out 26.5% of its earnings in the form of a dividend. M&F Bancorp pays out 18.5% 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. Trustmark has increased its dividend for 1 consecutive years. Trustmark is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Trustmark has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, M&F Bancorp has a beta of -0.54, meaning that its stock price is 154% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Trustmark and M&F Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trustmark	0	5	2	0	2.29
M&F Bancorp	0	0	0	0	0.00

Trustmark currently has a consensus target price of $44.75, indicating a potential downside of 2.97%. Given Trustmark’s stronger consensus rating and higher possible upside, research analysts plainly believe Trustmark is more favorable than M&F Bancorp.

Summary

Trustmark beats M&F Bancorp on 13 of the 17 factors compared between the two stocks.

About Trustmark

Trustmark Corporation operates as the bank holding company for Trustmark National Bank that provides banking and other financial solutions to individuals and corporate institutions in the United States. The company operates through three segments: General Banking, Wealth Management, and Insurance. It offers checking, savings, and money market accounts; certificates of deposits and individual retirement accounts; financing for commercial and industrial projects, income-producing commercial real estate, owner-occupied real estate, and construction and land development; and installment and real estate loans, and lines of credit, as well as treasury management services. The company also provides mortgage banking services, including construction financing, production of conventional and government-insured mortgages, and secondary marketing and mortgage servicing. In addition, it provides wealth management and trust services, such as administration of personal trusts and estates; management of investment accounts for individuals, employee benefit plans, and charitable foundations; and corporate trust and institutional custody, securities brokerage, financial and estate planning, retirement plan, and investment management services. Further, the company offers business insurance products and services for medical professionals, construction, manufacturing, hospitality, real estate, and group life and health plans; and life and health insurance, and personal line policies for individual customers. Trustmark Corporation was founded in 1889 and is headquartered in Jackson, Mississippi.

About M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.