Contrasting Malaga Financial (OTCMKTS:MLGF) and Sierra Bancorp (NASDAQ:BSRR)

Sierra Bancorp (NASDAQ:BSRR) and Malaga Financial (OTCMKTS:MLGF) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, institutional ownership, analyst recommendations, risk, valuation and profitability.

Institutional and Insider Ownership

55.4% of Sierra Bancorp shares are held by institutional investors. Comparatively, 1.2% of Malaga Financial shares are held by institutional investors. 11.9% of Sierra Bancorp shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Sierra Bancorp and Malaga Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sierra Bancorp	0	1	2	1	3.00
Malaga Financial	0	0	0	0	0.00

Sierra Bancorp currently has a consensus price target of $38.50, indicating a potential upside of 14.53%. Given Sierra Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Sierra Bancorp is more favorable than Malaga Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Sierra Bancorp	20.96%	11.82%	1.14%
Malaga Financial	N/A	N/A	N/A

Earnings and Valuation

This table compares Sierra Bancorp and Malaga Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sierra Bancorp	$146.49 million	3.03	$42.33 million	$3.12	10.77
Malaga Financial	N/A	N/A	$21.55 million	$2.18	9.83

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

Dividends

Sierra Bancorp pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Malaga Financial pays an annual dividend of $1.00 per share and has a dividend yield of 4.7%. Sierra Bancorp pays out 33.3% of its earnings in the form of a dividend. Malaga Financial pays out 45.9% 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. Sierra Bancorp has raised its dividend for 2 consecutive years.

Risk & Volatility

Sierra Bancorp has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500. Comparatively, Malaga Financial has a beta of 0.08, indicating that its share price is 92% less volatile than the S&P 500.

Summary

Sierra Bancorp beats Malaga Financial on 16 of the 17 factors compared between the two stocks.

About Sierra Bancorp

Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. It accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. The company's loan products include agricultural, commercial, consumer, real estate, construction, and mortgage loans. It also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.

About Malaga Financial

Malaga Financial Corporation operates as the holding company for Malaga Bank that provides various community banking products and services to personal and business customers. It offers checking, savings, NOW, and money market accounts, certificates of deposits, business banking, consumer, and demand deposits. The company also provides commercial real estate, single and multi-family residential mortgage, consumer, 14-unit investment property, construction, personal, and business loans; home equity lines of credit; and certificates of deposit. In addition, it offers coupon redemption, direct deposit, overdraft lines of credit, telephone transfers, U.S. savings bond redemption, and wire transfer services; and ATM and VISA debit cards, bank by mail, medallion signature guarantee, night depository, notary, safe deposit boxes, and trust deed note collection services. Further, the company provides online banking services, including bill payer, e-statements, and mobile banking services. The company was incorporated in 2002 and is headquartered in Palos Verdes Estates, California.