Financial Analysis: Northeast Community Bancorp (NASDAQ:NECB) and M&T Bank (NYSE:MTB)

Northeast Community Bancorp (NASDAQ:NECB) and M&T Bank (NYSE:MTB) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitability, analyst recommendations, institutional ownership, valuation and dividends.

Risk and Volatility

Northeast Community Bancorp has a beta of 0.37, meaning that its stock price is 63% less volatile than the S&P 500. Comparatively, M&T Bank has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Institutional & Insider Ownership

53.2% of Northeast Community Bancorp shares are held by institutional investors. Comparatively, 84.7% of M&T Bank shares are held by institutional investors. 7.1% of Northeast Community Bancorp shares are held by insiders. Comparatively, 0.4% of M&T Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Northeast Community Bancorp and M&T Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northeast Community Bancorp	27.21%	11.55%	1.99%
M&T Bank	22.63%	11.86%	1.40%

Dividends

Northeast Community Bancorp pays an annual dividend of $1.00 per share and has a dividend yield of 3.4%. M&T Bank pays an annual dividend of $6.00 per share and has a dividend yield of 2.7%. Northeast Community Bancorp pays out 32.9% of its earnings in the form of a dividend. M&T Bank pays out 31.3% 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. Northeast Community Bancorp has increased its dividend for 2 consecutive years. Northeast Community Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings and price targets for Northeast Community Bancorp and M&T Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Community Bancorp	0	1	2	2	3.20
M&T Bank	2	13	8	0	2.26

Northeast Community Bancorp presently has a consensus target price of $30.25, suggesting a potential upside of 3.60%. M&T Bank has a consensus target price of $244.89, suggesting a potential upside of 9.84%. Given M&T Bank’s higher possible upside, analysts clearly believe M&T Bank is more favorable than Northeast Community Bancorp.

Earnings and Valuation

This table compares Northeast Community Bancorp and M&T Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Community Bancorp	$158.21 million	2.54	$44.41 million	$3.04	9.61
M&T Bank	$13.23 billion	2.43	$2.85 billion	$19.16	11.64

M&T Bank has higher revenue and earnings than Northeast Community Bancorp. Northeast Community Bancorp is trading at a lower price-to-earnings ratio than M&T Bank, indicating that it is currently the more affordable of the two stocks.

Summary

M&T Bank beats Northeast Community Bancorp on 10 of the 18 factors compared between the two stocks.

About Northeast Community Bancorp

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and of state and municipal governments. Further, the company offers financial planning and investment advisory services; and life insurance products and fixed-rate annuities. It operates full-service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York and Danvers, Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.

About M&T Bank

M&T Bank Corp. operates as a bank holding company, which engages in the provision of retail and commercial banking, trust, wealth management, and investment services. It operates through the following segments: Commercial Bank, Retail Bank, Institutional Services and Wealth Management, and All Other. The Commercial Bank segment offers a wide range of credit products and banking services to middle-market and large commercial customers, mainly within the markets served by the company. The Retail Bank segment refers to the services to consumers and small businesses through the company’s branch network and several other delivery channels such as telephone banking, internet banking, and ATMs. The Institutional Services and Wealth Management segment relates to helping high net worth individuals, institutions, and families grow, preserve, and transfer wealth. The All Other segment reflects other activities of the company that are not directly attributable to the reported segments. The company was founded on August 30, 1856 and is headquartered in Buffalo, NY.