MidSouth Bancorp (MSL) versus Meridian Bancorp (EBSB) Critical Survey

MidSouth Bancorp (NYSE:MSL) and Meridian Bancorp (NASDAQ:EBSB) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Institutional and Insider Ownership

74.8% of MidSouth Bancorp shares are owned by institutional investors. Comparatively, 65.5% of Meridian Bancorp shares are owned by institutional investors. 12.8% of MidSouth Bancorp shares are owned by company insiders. Comparatively, 4.8% of Meridian 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.



Earnings and Valuation

This table compares MidSouth Bancorp and Meridian Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MidSouth Bancorp $95.06 million 2.03 -$27.52 million ($0.37) -31.19
Meridian Bancorp $236.68 million 3.80 $55.77 million $1.06 15.85

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

Volatility & Risk

MidSouth Bancorp has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500. Comparatively, Meridian Bancorp has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
MidSouth Bancorp -35.50% -7.20% -0.77%
Meridian Bancorp 23.48% 8.70% 0.98%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MidSouth Bancorp and Meridian Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MidSouth Bancorp 0 1 1 0 2.50
Meridian Bancorp 0 1 0 0 2.00

MidSouth Bancorp currently has a consensus target price of $15.00, indicating a potential upside of 29.98%. Meridian Bancorp has a consensus target price of $15.00, indicating a potential downside of 10.71%. Given MidSouth Bancorp’s stronger consensus rating and higher possible upside, research analysts plainly believe MidSouth Bancorp is more favorable than Meridian Bancorp.

Dividends

MidSouth Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. Meridian Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.7%. MidSouth Bancorp pays out -10.8% of its earnings in the form of a dividend. Meridian Bancorp pays out 26.4% 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. Meridian Bancorp has raised its dividend for 3 consecutive years. Meridian Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Meridian Bancorp beats MidSouth Bancorp on 10 of the 17 factors compared between the two stocks.

About MidSouth Bancorp

MidSouth Bancorp, Inc., a bank holding company, through its subsidiary MidSouth Bank, N.A., provides various community banking products and services to commercial and retail customers in the United States. The company offers various deposit products, including interest-bearing and noninterest-bearing checking accounts, money market, savings accounts, investment accounts, and NOW account deposits, as well as time deposits, such as certificates of deposit; and commercial and industrial, commercial real estate, and consumer loans, as well as other loans secured by real estate. It also provides cash management services; and electronic banking services comprising remote deposit capturing services, Internet banking, and debit and credit cards. As of March 1, 2019, the company had 42 offices located in Louisiana and Texas, as well as a network of approximately 55,000 surcharge-free ATMs. MidSouth Bancorp, Inc. was incorporated in 1984 and is headquartered in Lafayette, Louisiana.

About Meridian Bancorp

Meridian Bancorp, Inc. operates as the holding company for East Boston Savings Bank that provides various financial products and services for individuals and businesses primarily in Suffolk, Norfolk, Middlesex and Essex Counties, Massachusetts. The company accepts various deposit products, including non-interest-bearing demand deposits, such as checking accounts; interest-bearing demand accounts comprising NOW and money market accounts; savings accounts; and certificates of deposits, as well as commercial checking accounts. Its loan portfolio includes commercial real estate loans, which are secured by properties used for business purposes, such as office buildings, industrial facilities, and retail facilities; one- to four-family residential loans comprising mortgage loans that enable borrowers to purchase or refinance existing homes; multi-family real estate loans; construction loans; commercial and industrial loans; home equity lines of credit; and consumer loans that include automobile loans, loans secured by savings or certificate accounts, credit builders, and annuity and overdraft loans. In addition, the company offers non-deposit financial products, which comprise mutual funds, annuities, stocks, and bonds through a third-party broker-dealer; and long-term care insurance products. Further, it is also involved in the securities transactions business; and holding foreclosed real estate properties. The company operates 37 full-service locations, as well as 1 mobile branch and 3 loan centers. Meridian Bancorp, Inc. was founded in 1848 and is headquartered in Peabody, Massachusetts.

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