Analyzing Meridian (NASDAQ:MRBK) and Northeast Community Bancorp (NASDAQ:NECB)

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

Insider and Institutional Ownership

58.6% of Meridian shares are owned by institutional investors. Comparatively, 53.2% of Northeast Community Bancorp shares are owned by institutional investors. 14.1% of Meridian shares are owned by insiders. Comparatively, 7.1% of Northeast Community Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Meridian	11.89%	12.29%	0.95%
Northeast Community Bancorp	27.67%	12.00%	2.05%

Dividends

Meridian pays an annual dividend of $0.56 per share and has a dividend yield of 2.9%. Northeast Community Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.7%. Meridian pays out 27.2% of its earnings in the form of a dividend. Northeast Community Bancorp pays out 32.1% 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. Northeast Community Bancorp has raised its dividend for 2 consecutive years. Northeast Community Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Meridian and Northeast Community Bancorp”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meridian	$205.49 million	1.12	$21.84 million	$2.06	9.35
Northeast Community Bancorp	$103.62 million	3.56	$44.41 million	$3.12	8.58

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

Volatility and Risk

Meridian has a beta of 0.64, suggesting that its stock price is 36% less volatile than the S&P 500. Comparatively, Northeast Community Bancorp has a beta of 0.36, suggesting that its stock price is 64% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings for Meridian and Northeast Community Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meridian	1	0	3	0	2.50
Northeast Community Bancorp	0	2	1	1	2.75

Meridian currently has a consensus price target of $22.00, suggesting a potential upside of 14.17%. Northeast Community Bancorp has a consensus price target of $29.50, suggesting a potential upside of 10.20%. Given Meridian’s higher probable upside, equities analysts plainly believe Meridian is more favorable than Northeast Community Bancorp.

About Meridian

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.

About Northeast Community Bancorp

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and of state and municipal governments. Further, the company offers financial planning and investment advisory services; and life insurance products and fixed-rate annuities. It operates full-service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York and Danvers, Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.