Critical Survey: Magyar Bancorp (NASDAQ:MGYR) versus California BanCorp (NASDAQ:BCAL)

Magyar Bancorp (NASDAQ:MGYR) and California BanCorp (NASDAQ:BCAL) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Institutional & Insider Ownership

46.3% of Magyar Bancorp shares are owned by institutional investors. Comparatively, 55.4% of California BanCorp shares are owned by institutional investors. 11.1% of Magyar Bancorp shares are owned by insiders. Comparatively, 8.1% of California BanCorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Magyar Bancorp	19.74%	10.11%	1.19%
California BanCorp	25.47%	10.09%	1.45%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Magyar Bancorp and California BanCorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magyar Bancorp	0	1	0	0	2.00
California BanCorp	0	1	5	0	2.83

California BanCorp has a consensus target price of $24.50, suggesting a potential upside of 10.41%. Given California BanCorp’s stronger consensus rating and higher probable upside, analysts plainly believe California BanCorp is more favorable than Magyar Bancorp.

Dividends

Magyar Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. California BanCorp pays an annual dividend of $0.48 per share and has a dividend yield of 2.2%. Magyar Bancorp pays out 20.1% of its earnings in the form of a dividend. California BanCorp pays out 26.8% 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. Magyar Bancorp has raised its dividend for 3 consecutive years.

Volatility and Risk

Magyar Bancorp has a beta of 0.28, meaning that its stock price is 72% less volatile than the S&P 500. Comparatively, California BanCorp has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500.

Earnings & Valuation

This table compares Magyar Bancorp and California BanCorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magyar Bancorp	$63.60 million	2.34	$12.56 million	$1.99	11.56
California BanCorp	$237.07 million	3.01	$63.06 million	$1.79	12.40

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

Summary

California BanCorp 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 California BanCorp

Southern California Bancorp operates as the holding company for Bank of Southern California, N.A. that provides various financial products to individuals, professionals, and small-to medium-sized businesses. The company offers checking, personal and business savings, and money market accounts, as well as certificates of deposit. It also provides home equity lines of credit, business loans and lines of credit, commercial real estate and construction loans, small business administration loans, letters of credit, and personal and business credit cards. In addition, the company provides cash vault, sweep accounts, and remote deposit capture services; online and mobile banking services; courier service; lockbox services; and merchant services. It operates branches in San Diego, Orange, Ventura, Los Angeles, and Riverside counties, as well as the Inland Empire. The company was founded in 2001 and is headquartered in San Diego, California.