Merchants Bancorp (NASDAQ:MBIN) and Chemung Financial (NASDAQ:CHMG) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitability, analyst recommendations, institutional ownership and valuation.

Insider and Institutional Ownership

21.4% of Merchants Bancorp shares are held by institutional investors. Comparatively, 36.1% of Chemung Financial shares are held by institutional investors. 43.4% of Merchants Bancorp shares are held by company insiders. Comparatively, 19.0% of Chemung Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

Net Margins Return on Equity Return on Assets
Merchants Bancorp 29.85% 19.24% 1.49%
Chemung Financial 17.94% 8.79% 0.88%

Risk & Volatility

Merchants Bancorp has a beta of 1.24, suggesting that its share price is 24% more volatile than the S&P 500. Comparatively, Chemung Financial has a beta of 0.28, suggesting that its share price is 72% less volatile than the S&P 500.

Earnings and Valuation

This table compares Merchants Bancorp and Chemung Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Merchants Bancorp $259.08 million 2.31 $77.33 million $2.37 8.78
Chemung Financial $87.00 million 2.17 $15.61 million $3.20 12.15

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Merchants Bancorp and Chemung Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Merchants Bancorp 0 0 1 0 3.00
Chemung Financial 0 3 1 0 2.25

Merchants Bancorp presently has a consensus target price of $22.00, indicating a potential upside of 5.67%. Chemung Financial has a consensus target price of $45.50, indicating a potential upside of 17.06%. Given Chemung Financial’s higher probable upside, analysts plainly believe Chemung Financial is more favorable than Merchants Bancorp.

Dividends

Merchants Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.3%. Chemung Financial pays an annual dividend of $1.04 per share and has a dividend yield of 2.7%. Merchants Bancorp pays out 11.8% of its earnings in the form of a dividend. Chemung Financial pays out 32.5% 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 raised its dividend for 1 consecutive years.

Summary

Merchants Bancorp beats Chemung Financial on 11 of the 16 factors compared between the two stocks.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. The company operates in three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment originates and services government sponsored mortgages for multi-family and healthcare facilities. The Mortgage Warehousing segment funds agency eligible residential loans, including origination, purchase, and sale in the secondary market, 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, such as various types of deposit products comprising checking, savings, and time deposit accounts; commercial, commercial real estate, mortgage, and other consumer loan products; and letters of credit, as well as engages in the retail banking, agricultural lending, single family mortgage lending, small business administration lending, and correspondent lending and servicing businesses. It operates 14 offices. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

About Chemung Financial

Chemung Financial Corporation operates as a bank. The bank offers demand deposits and interest and non-interest bearing time and savings deposits. It's deposits include jumbo deposits and retail time deposits. The bank provides commercial and industrial loans, consumer loans, commercial real estate loans, and other loans and leases. The company offers consumer loans, including credit card loans, revolving credit plans, and automotive loans. The company offers commercial real estate loans for land development and on-site construction of industrial, commercial, residential, or farm buildings in the United States; real estate-backed residential loans; and commercial loans collateralized by real estate properties. The company offers domestic and foreign commercial and industrial loans. The company offers loans for the purpose of financing agricultural production; loans which include planned and unplanned overdrafts, to governments in non-U.S. countries, to their official institutions, and to international and regional institutions. For 2017, it has an asset value of 1.7 million USD. The bank has generated a net income of 7,430 USD in December 31, 2017. Chemung Financial Corporation was founded in 1833 and is based in Elmira, New York.

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