Critical Review: Marlin Business Services (MRLN) vs. Franklin Financial Network (FSB)

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Marlin Business Services (NYSE: FSB) and Franklin Financial Network (NYSE:FSB) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, profitability and valuation.

Valuation & Earnings

This table compares Marlin Business Services and Franklin Financial Network’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Marlin Business Services $119.05 million 2.94 $25.29 million $1.50 18.73
Franklin Financial Network $147.17 million 3.98 $28.08 million $2.42 16.69

Franklin Financial Network has higher revenue and earnings than Marlin Business Services. Franklin Financial Network is trading at a lower price-to-earnings ratio than Marlin Business Services, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Marlin Business Services and Franklin Financial Network’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Marlin Business Services 26.20% 12.48% 2.12%
Franklin Financial Network 19.27% 11.81% 0.95%

Analyst Ratings

This is a breakdown of current ratings and price targets for Marlin Business Services and Franklin Financial Network, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Marlin Business Services 0 0 1 0 3.00
Franklin Financial Network 0 6 1 0 2.14

Marlin Business Services presently has a consensus target price of $29.00, suggesting a potential upside of 3.20%. Franklin Financial Network has a consensus target price of $39.00, suggesting a potential downside of 3.47%. Given Marlin Business Services’ stronger consensus rating and higher possible upside, analysts plainly believe Marlin Business Services is more favorable than Franklin Financial Network.

Insider and Institutional Ownership

82.8% of Marlin Business Services shares are held by institutional investors. Comparatively, 64.3% of Franklin Financial Network shares are held by institutional investors. 7.7% of Marlin Business Services shares are held by company insiders. Comparatively, 10.6% of Franklin Financial Network shares are held 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

Marlin Business Services pays an annual dividend of $0.56 per share and has a dividend yield of 2.0%. Franklin Financial Network does not pay a dividend. Marlin Business Services pays out 37.3% of its earnings in the form of a dividend.

Risk and Volatility

Marlin Business Services has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500. Comparatively, Franklin Financial Network has a beta of 1.06, indicating that its share price is 6% more volatile than the S&P 500.

Summary

Marlin Business Services beats Franklin Financial Network on 8 of the 15 factors compared between the two stocks.

Marlin Business Services Company Profile

Marlin Business Services Corp., through its subsidiaries, provides equipment financing solutions to small and mid-sized businesses in the United States. It finances approximately 100 categories of equipment, including commercial and industrial, restaurant, auto, medical, VOIP, and printing equipment, as well as computer software, copiers, cash registers, dental implant systems, and other commercial equipment. The company also offers property insurance coverage for its financed equipment; and operates a commercial bank that issues certificates of deposit and money market demand accounts, as well as provides small business loans. Marlin Business Services Corp. provides its solutions through a network of independent commercial equipment dealers and national account programs, as well as through direct solicitation and relationships with select lease and loan brokers. The company was founded in 1997 and is based in Mount Laurel, New Jersey.

Franklin Financial Network Company Profile

Franklin Financial Network, Inc. operates as the holding company for Franklin Synergy Bank that provides various banking and related financial services to small businesses, corporate entities, local governments, and individuals. The company's deposit products include demand, interest-bearing transaction accounts, money market accounts, certificates of deposit, municipal deposits, savings, and deposit accounts. The company also provides consumer lending solutions, including first mortgage real estate loans, home equity loans, and other personal loans; small business administration, and commercial and industrial loans; and single-family residential mortgage loans and construction loans for residential and commercial purposes. In addition, it offers wealth management/trust services; and retirement planning, financial planning, investment services, and insurance products. The company operates through 13 branches and a loan production office in the Williamson, Rutherford, and Davidson counties in the Nashville metropolitan area. Franklin Financial Network, Inc. was founded in 2007 and is headquartered in Franklin, Tennessee.

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