Malvern Bancorp (NASDAQ: MLVF) and Meridian Bancorp (NASDAQ:EBSB) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitabiliy, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.

Profitability

This table compares Malvern Bancorp and Meridian Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Malvern Bancorp 38.55% 6.35% 0.69%
Meridian Bancorp 20.81% 5.97% 0.84%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Malvern Bancorp and Meridian Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Malvern Bancorp 0 1 0 0 2.00
Meridian Bancorp 0 2 1 0 2.33

Malvern Bancorp currently has a consensus target price of $24.00, indicating a potential downside of 2.64%. Meridian Bancorp has a consensus target price of $19.67, indicating a potential upside of 11.74%. Given Meridian Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Meridian Bancorp is more favorable than Malvern Bancorp.

Institutional & Insider Ownership

61.2% of Malvern Bancorp shares are held by institutional investors. Comparatively, 65.1% of Meridian Bancorp shares are held by institutional investors. 3.2% of Malvern Bancorp shares are held by insiders. Comparatively, 5.1% of Meridian Bancorp shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Malvern Bancorp and Meridian Bancorp’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Malvern Bancorp $21.07 million 7.69 $12.23 million $1.86 13.25
Meridian Bancorp $135.37 million 6.62 $35.15 million $0.69 25.51

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

Dividends

Meridian Bancorp pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Malvern Bancorp does not pay a dividend. Meridian Bancorp pays out 23.2% of its earnings in the form of a dividend.

Summary

Meridian Bancorp beats Malvern Bancorp on 10 of the 15 factors compared between the two stocks.

Meridian Bancorp Company Profile

Meridian Bancorp Inc, formerly Meridian Interstate Bancorp, Inc., is a mid-tier stock holding company of East Boston Savings Bank (the Bank). The Bank is a state-chartered stock savings bank that operates from 24 full-service locations and two loan centers in the Boston metropolitan area. East Boston Savings Bank operates eight of its full-service locations and a loan center under the name Mt. Washington Bank, a division of East Boston Savings Bank. The Bank offers a variety of deposit and loan products to individuals and businesses located in its primary market, which consists of Suffolk, Middlesex and Essex Counties, Massachusetts. The Bank operates as a community-oriented financial institution offering financial services to consumers and businesses. As of December 31, 2011, Meridian Financial Services, Incorporated owned 59.4% interest of the Company.

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