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

Analyst Ratings

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

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

Clifton Bancorp currently has a consensus price target of $17.00, suggesting a potential upside of 8.77%. Meridian Bancorp has a consensus price target of $19.67, suggesting a potential upside of 15.01%. Given Meridian Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Meridian Bancorp is more favorable than Clifton Bancorp.

Institutional and Insider Ownership

61.8% of Clifton Bancorp shares are held by institutional investors. Comparatively, 64.8% of Meridian Bancorp shares are held by institutional investors. 6.3% of Clifton Bancorp shares are held by company insiders. Comparatively, 5.1% of Meridian Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Clifton Bancorp and Meridian Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Clifton Bancorp $29.40 million 11.36 $5.34 million $0.25 62.52
Meridian Bancorp $146.27 million 5.96 $40.80 million $0.80 21.38

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

Dividends

Clifton Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.5%. Meridian Bancorp pays an annual dividend of $0.16 per share and has a dividend yield of 0.9%. Clifton Bancorp pays out 96.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Meridian Bancorp pays out 20.0% of its earnings in the form of a dividend.

Risk and Volatility

Clifton Bancorp has a beta of 0.4, meaning that its share price is 60% less volatile than the S&P 500. Comparatively, Meridian Bancorp has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Clifton Bancorp 11.35% 1.69% 0.36%
Meridian Bancorp 22.50% 6.77% 0.92%

Summary

Meridian Bancorp beats Clifton Bancorp on 11 of the 16 factors compared between the two stocks.

About Clifton Bancorp

Clifton Bancorp Inc, formerly Clifton Savings Bancorp, Inc., is a savings and loan holding company that operates through its subsidiary, Clifton Savings Bank (Clifton Savings). Clifton Savings is a federally chartered savings bank. Clifton Savings operate as a community-oriented financial institution offering traditional financial services to consumers and businesses in the market area. It attracts deposits from the general public and uses those funds to originate one- to four-family, multi-family and commercial real estate, and consumer loans, which it holds for investment. Clifton Savings has one wholly owned subsidiary, Botany Inc., an investment company. In addition to the main office located in Passaic County, Clifton Savings operates 11 branch offices in Bergen and Passaic Counties, which, along with Essex, Morris, Hudson and Union Counties are its primary market area.

About Meridian Bancorp

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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