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

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

Analyst Ratings

This is a breakdown of recent recommendations for Magyar Bancorp and Meridian Bank, as reported by MarketBeat.com.

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

Meridian Bank has a consensus target price of $22.00, indicating a potential upside of 7.37%. Given Meridian Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Meridian Bank is more favorable than Magyar Bancorp.

Institutional & Insider Ownership

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

Volatility & Risk

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magyar Bancorp	$58.42 million	1.97	$9.76 million	$1.73	10.25
Meridian Bank	$205.49 million	1.18	$21.84 million	$1.89	10.84

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.

Dividends

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

Profitability

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

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

Summary

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

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.

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.