Merchants Bancorp (NASDAQ:MBIN) and State Bank Financial (NASDAQ:STBZ) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.
Valuation and Earnings
This table compares Merchants Bancorp and State Bank Financial’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Merchants Bancorp||$142.07 million||5.16||$54.68 million||$1.97||12.96|
|State Bank Financial||$248.13 million||4.74||$46.57 million||$1.46||20.62|
Merchants Bancorp has higher earnings, but lower revenue than State Bank Financial. Merchants Bancorp is trading at a lower price-to-earnings ratio than State Bank Financial, indicating that it is currently the more affordable of the two stocks.
Merchants Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. State Bank Financial pays an annual dividend of $0.80 per share and has a dividend yield of 2.7%. Merchants Bancorp pays out 12.2% of its earnings in the form of a dividend. State Bank Financial pays out 54.8% 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. State Bank Financial has raised its dividend for 5 consecutive years. State Bank Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This is a summary of recent ratings and recommmendations for Merchants Bancorp and State Bank Financial, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|State Bank Financial||0||6||1||0||2.14|
Merchants Bancorp presently has a consensus target price of $21.25, suggesting a potential downside of 16.80%. State Bank Financial has a consensus target price of $35.90, suggesting a potential upside of 19.23%. Given State Bank Financial’s higher probable upside, analysts clearly believe State Bank Financial is more favorable than Merchants Bancorp.
This table compares Merchants Bancorp and State Bank Financial’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|State Bank Financial||20.06%||10.64%||1.38%|
Insider and Institutional Ownership
22.5% of Merchants Bancorp shares are held by institutional investors. Comparatively, 79.0% of State Bank Financial shares are held by institutional investors. 43.4% of Merchants Bancorp shares are held by insiders. Comparatively, 4.4% of State Bank Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Merchants Bancorp beats State Bank Financial on 10 of the 16 factors compared between the two stocks.
Merchants Bancorp Company Profile
Merchants Bancorp operates as a diversified bank holding company in the United States. It operates in three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans, including origination, purchase, and sale in the secondary market, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, such as various types of deposit products comprising checking, savings, and time deposit accounts; commercial, commercial real estate, mortgage, and other consumer loan products; and letters of credit, as well as engages in the retail banking, agricultural lending, single family mortgage lending, small business administration lending, and correspondent lending and servicing businesses. The company operates seven branches comprising three branches in the Indianapolis, Indiana metropolitan area; two branches in Lynn, Indiana; and two branches in Joy and New Boston, Illinois. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.
State Bank Financial Company Profile
State Bank Financial Corporation operates as the bank holding company for State Bank and Trust Company that provides various community banking services to individuals and businesses. The company's deposit products and services include checking, commercial operating, savings and money market, and individual retirement accounts, as well as short- to longer-term certificates of deposit, commercial and consumer demand deposit, and savings and time deposit products. It also provides commercial and residential real estate mortgage, real estate construction, commercial and industrial, agriculture and consumer, real estate, real estate construction and development, commercial, financial, and agricultural loans, as well as loans to small and medium-sized businesses. In addition, the company offers correspondent banking products; payment solutions for funds collection and concentration services, such as ACH origination, electronic bill presentment and payment, remote deposit capture and cash deposit, retail and wholesale lockbox, and wire services. Further, it provides cash management accounts; disbursement services comprising online bill pay, person-to-person payments, and bank-to-bank transfers; fraud controls that include Positive Pay, ACH Decisioning, and IBM Security Trusteer Rapport malware protection; and online cash management systems. Additionally, the company offers payroll services, which comprise automated human resources information system, payroll, benefit, labor management, and insurance services; and online banking and bill payment, safe deposit box rental, debit card, and automated teller machine card services. As of December 31, 2017, it operated 32 full-service banking offices in Georgia, which comprises Bibb, Chatham, Clarke, Cobb, Columbia, Dooly, Fulton, Gwinnett, Hall, Houston, Jones, Liberty, McDuffie, Richmond, and Tattnall counties. The company was founded in 2005 and is headquartered in Atlanta, Georgia.
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