Critical Analysis: Eastern Bankshares (NASDAQ:EBC) versus Magyar Bancorp (NASDAQ:MGYR)

Eastern Bankshares (NASDAQ:EBC) and Magyar Bancorp (NASDAQ:MGYR) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, valuation, risk, analyst recommendations and dividends.

Earnings and Valuation

This table compares Eastern Bankshares and Magyar Bancorp’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eastern Bankshares	$637.25 million	3.75	$232.18 million	$2.85	4.74
Magyar Bancorp	$40.75 million	1.78	$7.71 million	$1.20	9.16

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

Analyst Ratings

This is a summary of current recommendations and price targets for Eastern Bankshares and Magyar Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eastern Bankshares	1	0	2	0	2.33
Magyar Bancorp	0	0	0	0	N/A

Eastern Bankshares currently has a consensus target price of $15.25, suggesting a potential upside of 12.80%. Given Eastern Bankshares’ higher probable upside, research analysts plainly believe Eastern Bankshares is more favorable than Magyar Bancorp.

Institutional & Insider Ownership

71.7% of Eastern Bankshares shares are held by institutional investors. Comparatively, 46.3% of Magyar Bancorp shares are held by institutional investors. 1.2% of Eastern Bankshares shares are held by insiders. Comparatively, 10.5% of Magyar Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Eastern Bankshares	49.59%	5.59%	0.72%
Magyar Bancorp	16.44%	7.26%	0.85%

Dividends

Eastern Bankshares pays an annual dividend of $0.44 per share and has a dividend yield of 3.3%. Magyar Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.8%. Eastern Bankshares pays out 15.4% of its earnings in the form of a dividend. Magyar Bancorp pays out 16.7% 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 2 consecutive years. Eastern Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Eastern Bankshares has a beta of 0.9, suggesting that its share price is 10% less volatile than the S&P 500. Comparatively, Magyar Bancorp has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500.

Summary

Eastern Bankshares beats Magyar Bancorp on 11 of the 16 factors compared between the two stocks.

About Eastern Bankshares

Eastern Bankshares, Inc. operates as the bank holding company for Eastern Bank that provides banking products and services primarily to retail, commercial, and small business customers. The company provides deposit accounts, interest checking accounts, money market accounts, savings accounts, and time certificates of deposit accounts. It also offers commercial and industrial, commercial real estate and construction, small business, residential real estate, and home equity loans; lines of credit; and other consumer loans comprising unsecured personal lines of credit, overdraft protection, automobile loans, home improvement loans, airplane loans, and other personal loans. In addition, the company provides trust, financial planning and portfolio management, automated lock box collection, cash management, and account reconciliation services; personal, business, and employee benefits insurance products. Eastern Bankshares, Inc. was founded in 1818 and is headquartered in Boston, Massachusetts.

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.