Reviewing M&F Bancorp (OTCMKTS:MFBP) & Home Bancorp (NASDAQ:HBCP)

M&F Bancorp (OTCMKTS:MFBP) and Home Bancorp (NASDAQ:HBCP) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, profitability, analyst recommendations, dividends, risk, valuation and institutional ownership.

Valuation and Earnings

This table compares M&F Bancorp and Home Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
M&F Bancorp	$29.72 million	1.76	$4.30 million	$1.30	20.77
Home Bancorp	$209.23 million	2.53	$46.06 million	$5.95	11.34

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

Risk & Volatility

M&F Bancorp has a beta of -0.53, indicating that its stock price is 153% less volatile than the S&P 500. Comparatively, Home Bancorp has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for M&F Bancorp and Home Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
M&F Bancorp	0	0	0	0	0.00
Home Bancorp	0	3	1	1	2.60

Home Bancorp has a consensus price target of $65.50, indicating a potential downside of 2.91%. Given Home Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Home Bancorp is more favorable than M&F Bancorp.

Institutional and Insider Ownership

49.4% of Home Bancorp shares are held by institutional investors. 2.9% of M&F Bancorp shares are held by company insiders. Comparatively, 6.2% of Home Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Dividends

M&F Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 0.9%. Home Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 1.8%. M&F Bancorp pays out 18.5% of its earnings in the form of a dividend. Home Bancorp pays out 20.8% 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. Home Bancorp has raised its dividend for 10 consecutive years. Home Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares M&F Bancorp and Home Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
M&F Bancorp	N/A	N/A	N/A
Home Bancorp	22.18%	10.86%	1.32%

Summary

Home Bancorp beats M&F Bancorp on 16 of the 18 factors compared between the two stocks.

About M&F Bancorp

M&F Bancorp, Inc. operates as a bank holding company for the Mechanics and Farmers Bank that provides consumer and commercial banking products and services in North Carolina. It offers deposit products, including demand deposits; checking, savings, and money market accounts, as well as certificates of deposit. The company provides loans for commercial and residential real estate, and construction; and consumer and other loans; as well as ATM services. M&F Bancorp, Inc. was founded in 1907 and is headquartered in Durham, North Carolina.

About Home Bancorp

Home Bancorp, Inc. operates as the bank holding company for Home Bank, National Association that provides various banking products and services in Louisiana, Mississippi, and Texas. It offers deposit products, including interest-bearing and noninterest-bearing checking, money market, savings, NOW, and certificates of deposit accounts. The company also provides various loan products comprising one-to four-family first mortgage loans, home equity loans and lines, commercial real estate loans, construction and land loans, multi-family residential loans, commercial and industrial loans, and consumer loans. In addition, it invests in securities; and offers credit cards and online banking services. Home Bancorp, Inc. was founded in 1908 and is headquartered in Lafayette, Louisiana.