Reviewing MainStreet Bancshares (NASDAQ:MNSB) and ChoiceOne Financial Services (NASDAQ:COFS)

MainStreet Bancshares (NASDAQ:MNSB) and ChoiceOne Financial Services (NASDAQ:COFS) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Profitability

This table compares MainStreet Bancshares and ChoiceOne Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bancshares	12.99%	9.00%	0.85%
ChoiceOne Financial Services	17.61%	11.35%	0.87%

Institutional and Insider Ownership

52.3% of MainStreet Bancshares shares are held by institutional investors. Comparatively, 19.9% of ChoiceOne Financial Services shares are held by institutional investors. 9.2% of MainStreet Bancshares shares are held by company insiders. Comparatively, 7.9% of ChoiceOne Financial Services shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares MainStreet Bancshares and ChoiceOne Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bancshares	$127.76 million	1.01	$26.58 million	$2.59	6.54
ChoiceOne Financial Services	$113.89 million	2.36	$21.26 million	$2.81	10.68

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

Volatility and Risk

MainStreet Bancshares has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, ChoiceOne Financial Services has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for MainStreet Bancshares and ChoiceOne Financial Services, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bancshares	0	0	0	0	N/A
ChoiceOne Financial Services	0	1	0	0	2.00

ChoiceOne Financial Services has a consensus target price of $24.00, indicating a potential downside of 20.00%. Given ChoiceOne Financial Services’ higher probable upside, analysts plainly believe ChoiceOne Financial Services is more favorable than MainStreet Bancshares.

Dividends

MainStreet Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. ChoiceOne Financial Services pays an annual dividend of $1.08 per share and has a dividend yield of 3.6%. MainStreet Bancshares pays out 15.4% of its earnings in the form of a dividend. ChoiceOne Financial Services pays out 38.4% 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. ChoiceOne Financial Services has increased its dividend for 12 consecutive years. ChoiceOne Financial Services is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

ChoiceOne Financial Services beats MainStreet Bancshares on 10 of the 15 factors compared between the two stocks.

About MainStreet Bancshares

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.

About ChoiceOne Financial Services

ChoiceOne Financial Services, Inc. operates as the bank holding company for ChoiceOne Bank that provides banking services to corporations, partnerships, and individuals in Michigan. The company offers various deposit products, including time, savings, and demand deposits, safe deposit, and automated transaction machine services. It also provides commercial lending products, such as business, industry, agricultural, construction, inventory, and real estate loans; and consumer loans comprising direct and indirect loans to consumers and purchasers of residential and real properties. In addition, the company offers alternative investment products, which include annuities and mutual funds; and sells insurance policies, such as life and health for commercial and consumer clients. Further, it provides trust and wealth management services. ChoiceOne Financial Services, Inc. was founded in 1898 and is headquartered in Sparta, Michigan.