Analyzing MainStreet Bank (NASDAQ:MNSB) & SR Bancorp (NASDAQ:SRBK)

MainStreet Bank (NASDAQ:MNSB) and SR Bancorp (NASDAQ:SRBK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Earnings & Valuation

This table compares MainStreet Bank and SR Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bank	$135.62 million	1.27	$15.61 million	$1.99	12.15
SR Bancorp	$48.54 million	3.15	$5.14 million	$0.42	45.00

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

Profitability

This table compares MainStreet Bank and SR Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bank	12.94%	9.13%	0.80%
SR Bancorp	6.39%	1.41%	0.24%

Volatility and Risk

MainStreet Bank has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500. Comparatively, SR Bancorp has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Institutional & Insider Ownership

52.3% of MainStreet Bank shares are held by institutional investors. Comparatively, 24.7% of SR Bancorp shares are held by institutional investors. 10.2% of MainStreet Bank shares are held by insiders. Comparatively, 7.8% of SR Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

MainStreet Bank pays an annual dividend of $0.40 per share and has a dividend yield of 1.7%. SR Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.1%. MainStreet Bank pays out 20.1% of its earnings in the form of a dividend. SR Bancorp pays out 47.6% 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. MainStreet Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for MainStreet Bank and SR Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bank	0	2	0	0	2.00
SR Bancorp	0	1	1	0	2.50

SR Bancorp has a consensus price target of $19.00, suggesting a potential upside of 0.53%. Given SR Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe SR Bancorp is more favorable than MainStreet Bank.

Summary

MainStreet Bank beats SR Bancorp on 10 of the 16 factors compared between the two stocks.

About MainStreet Bank

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 SR Bancorp

SR Bancorp, Inc. operates as the holding company for Somerset Regal Bank that provides customary retail and commercial banking services to individuals, businesses, and local municipalities in the communities of Somerset, Middlesex, Hunterdon, and Essex counties in New Jersey. It offers deposit instruments, including noninterest-bearing demand deposits, interest-bearing demand accounts, savings accounts, money market accounts, and certificates of deposit. The company also provides loans comprising one- to four family-residential mortgage loans, home equity loans and lines of credit, unsecured personal loans, and rehabilitation loans; and bill payment services. In addition, it is involved in the investment activities. The company was founded in 1887 and is headquartered in Bound Brook, New Jersey.