Contrasting Mechanics Bancorp (NASDAQ:MCHB) and Carter Bankshares (NASDAQ:CARE)

Carter Bankshares (NASDAQ:CARE) and Mechanics Bancorp (NASDAQ:MCHB) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Carter Bankshares and Mechanics Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carter Bankshares	0	4	1	0	2.20
Mechanics Bancorp	0	3	3	0	2.50

Carter Bankshares currently has a consensus price target of $30.75, suggesting a potential upside of 1.45%. Mechanics Bancorp has a consensus price target of $17.10, suggesting a potential upside of 19.25%. Given Mechanics Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Mechanics Bancorp is more favorable than Carter Bankshares.

Institutional and Insider Ownership

41.5% of Carter Bankshares shares are held by institutional investors. Comparatively, 74.7% of Mechanics Bancorp shares are held by institutional investors. 2.4% of Carter Bankshares shares are held by insiders. Comparatively, 81.6% of Mechanics Bancorp shares are held 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.

Dividends

Carter Bankshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Mechanics Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 7.0%. Carter Bankshares pays out 6.9% of its earnings in the form of a dividend. Mechanics Bancorp pays out 81.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Carter Bankshares and Mechanics Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carter Bankshares	36.79%	7.46%	0.73%
Mechanics Bancorp	23.98%	10.70%	1.37%

Valuation and Earnings

This table compares Carter Bankshares and Mechanics Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carter Bankshares	$214.28 million	3.14	$31.00 million	$5.81	5.22
Mechanics Bancorp	$704.83 million	4.51	$265.74 million	$1.23	11.66

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

Risk and Volatility

Carter Bankshares has a beta of 0.59, meaning that its share price is 41% less volatile than the S&P 500. Comparatively, Mechanics Bancorp has a beta of 1.44, meaning that its share price is 44% more volatile than the S&P 500.

Summary

Mechanics Bancorp beats Carter Bankshares on 13 of the 16 factors compared between the two stocks.

About Carter Bankshares

Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various banking products and services in the United States. It accepts various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposits. The company also offers commercial loans comprising secured and unsecured loans; consumer loans, such as secured and unsecured loans for financing automobiles, home improvements, education, overdraft protection, and personal investments, as well as residential mortgages; real estate construction, acquisition, commercial, and industrial loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it provides other banking services that include safe deposit boxes, direct deposit of payroll, and social security checks; online banking products, including online and mobile banking, online account opening, bill pay, e-statement, mobile deposit, digital wallet, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.

About Mechanics Bancorp

HomeStreet, Inc. operates as the bank holding company for HomeStreet Bank that provides commercial, mortgage, and consumer/retail banking services primarily in the Western United States. The company offers personal and business checking, savings accounts, interest-bearing negotiable order of withdrawal accounts, money market accounts, and time certificates of deposit; credit cards; insurance; and treasury management products and services. Its loan products include commercial business and agriculture loans, single family residential mortgages, consumer loans, commercial loans secured by residential and commercial real estate, and construction loans for residential and commercial real estate development, as well as consumer installment loans and permanent loans on commercial real estate and single-family residences. In addition, the company offers its products and services through bank branches, loan production offices, and ATMs, as well as through online, mobile, and telephone banking. As of December 31, 2021, it operated 60 full-service bank branches located in Washington state, Northern and Southern California, the Portland, Oregon, and Hawaii; and five primary stand-alone commercial lending centers in Central Washington, Oregon, Southern California, Idaho, and Utah. HomeStreet, Inc. serves small and medium sized businesses, real estate investors, professional firms, and individuals. The company was formerly known as Continental Mortgage and Loan Company. HomeStreet, Inc. was incorporated in 1921 and is headquartered in Seattle, Washington.