Head-To-Head Review: Merchants Bancorp (NASDAQ:MBIN) versus Princeton Bancorp (NASDAQ:BPRN)

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

Analyst Recommendations

This is a breakdown of current recommendations for Princeton Bancorp and Merchants Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Princeton Bancorp	0	2	0	1	2.67
Merchants Bancorp	1	2	2	0	2.20

Princeton Bancorp currently has a consensus target price of $35.00, suggesting a potential upside of 1.52%. Merchants Bancorp has a consensus target price of $40.25, suggesting a potential upside of 23.22%. Given Merchants Bancorp’s higher probable upside, analysts clearly believe Merchants Bancorp is more favorable than Princeton Bancorp.

Institutional and Insider Ownership

43.4% of Princeton Bancorp shares are held by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are held by institutional investors. 23.0% of Princeton Bancorp shares are held by insiders. Comparatively, 34.8% of Merchants Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Princeton Bancorp has a beta of 0.65, suggesting that its share price is 35% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.33, suggesting that its share price is 33% more volatile than the S&P 500.

Earnings & Valuation

This table compares Princeton Bancorp and Merchants Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Princeton Bancorp	$131.10 million	1.78	$17.37 million	$2.57	13.41
Merchants Bancorp	$686.02 million	2.19	$320.39 million	$4.35	7.51

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

Dividends

Princeton Bancorp pays an annual dividend of $1.40 per share and has a dividend yield of 4.1%. Merchants Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.2%. Princeton Bancorp pays out 54.5% of its earnings in the form of a dividend. Merchants Bancorp pays out 9.2% 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 8 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Princeton Bancorp	N/A	N/A	N/A
Merchants Bancorp	17.73%	15.37%	1.30%

Summary

Merchants Bancorp beats Princeton Bancorp on 13 of the 18 factors compared between the two stocks.

About Princeton Bancorp

Princeton Bancorp, Inc. operates as the bank holding company for The Bank of Princeton that provides various banking products and services. It accepts various deposit products, including checking, savings, attorney trust, and money market accounts, as well as certificates of deposit. The company also offers traditional retail banking services, one-to-four-family residential mortgage loans, multi-family and commercial mortgage loans, construction loans, and commercial business loans, as well as consumer loans, including home equity loans and lines of credit. In addition, it provides debit and credit cards, and money orders, direct deposit, automated teller machines, cashier's checks, safe deposit boxes, online banking, wire transfers, night depository, remote deposit capture, bank-by-mail, online, and automated telephone banking services, as well as payroll-related services and merchant credit card processing services. Further, the company offers full on-line statements, on-line bill payment, account inquiries, mobile banking, transaction histories and details, and account-to-account transfer services. Princeton Bancorp, Inc. was founded in 2007 and is headquartered in Princeton, New Jersey.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, 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, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.