Merchants Bancorp (NASDAQ:MBIN) and Hanover Bancorp (NASDAQ:HNVR) Critical Analysis

Hanover Bancorp (NASDAQ:HNVR) and Merchants Bancorp (NASDAQ:MBIN) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, dividends, valuation, earnings, profitability, risk and institutional ownership.

Volatility & Risk

Hanover Bancorp has a beta of 0.04, indicating that its stock price is 96% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Earnings and Valuation

This table compares Hanover Bancorp and Merchants Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanover Bancorp	$143.32 million	1.11	$7.49 million	$1.00	22.26
Merchants Bancorp	$1.37 billion	1.65	$218.77 million	$3.78	12.97

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

Profitability

This table compares Hanover Bancorp and Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanover Bancorp	5.22%	5.18%	0.43%
Merchants Bancorp	16.02%	13.17%	1.14%

Analyst Ratings

This is a summary of recent recommendations for Hanover Bancorp and Merchants Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanover Bancorp	1	3	1	0	2.00
Merchants Bancorp	0	2	2	1	2.80

Hanover Bancorp presently has a consensus target price of $24.33, suggesting a potential upside of 9.31%. Merchants Bancorp has a consensus target price of $43.25, suggesting a potential downside of 11.79%. Given Hanover Bancorp’s higher probable upside, equities research analysts plainly believe Hanover Bancorp is more favorable than Merchants Bancorp.

Institutional & Insider Ownership

15.0% of Hanover Bancorp shares are owned by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are owned by institutional investors. 24.8% of Hanover Bancorp shares are owned by company insiders. Comparatively, 44.9% of Merchants Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.8%. Merchants Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 0.9%. Hanover Bancorp pays out 40.0% of its earnings in the form of a dividend. Merchants Bancorp pays out 11.6% 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. Merchants Bancorp has increased its dividend for 8 consecutive years.

Summary

Merchants Bancorp beats Hanover Bancorp on 15 of the 18 factors compared between the two stocks.

About Hanover Bancorp

Hanover Bancorp, Inc., a bank holding company for Hanover Community Bank, provides personal and business lending and deposit services to businesses, municipalities, and individuals in the New York metro area. The company offers checking, credit cards, debit cards, money market, savings, government and municipal banking, and professional services, as well as time deposits, including certificate of deposit and individual retirement accounts. It also provides business loans, commercial real estate financing, small business administration, lending directory services, and residential mortgage. In addition, the company offers cash management, online and mobile banking, merchant services, and digital solutions. Its banking offices are located in Nassau, Suffolk, Queens, Kings, New York Counties, New York, Monmouth County, Freehold, and New Jersey. The company was founded in 2008 and is headquartered in Mineola, New York.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, 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, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.