Analyzing Merchants Bancorp (NASDAQ:MBIN) & ECB Bancorp (NASDAQ:ECBK)

ECB Bancorp (NASDAQ:ECBK) and Merchants Bancorp (NASDAQ:MBIN) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, earnings, analyst recommendations, institutional ownership, dividends, risk and profitability.

Institutional and Insider Ownership

30.3% of ECB Bancorp shares are owned by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are owned by institutional investors. 9.0% of ECB Bancorp shares are owned by insiders. Comparatively, 34.8% of Merchants Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

ECB Bancorp has a beta of 0.46, meaning that its stock price is 54% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.25, meaning that its stock price is 25% more volatile than the S&P 500.

Profitability

This table compares ECB Bancorp and Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ECB Bancorp	9.78%	4.61%	0.52%
Merchants Bancorp	16.02%	13.17%	1.14%

Earnings & Valuation

This table compares ECB Bancorp and Merchants Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ECB Bancorp	$79.51 million	1.81	$7.77 million	$0.93	17.59
Merchants Bancorp	$1.37 billion	1.44	$218.77 million	$3.78	11.34

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

Analyst Ratings

This is a summary of current ratings and price targets for ECB Bancorp and Merchants Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ECB Bancorp	0	0	1	0	3.00
Merchants Bancorp	0	2	2	1	2.80

Merchants Bancorp has a consensus target price of $43.25, suggesting a potential upside of 0.93%. Given Merchants Bancorp’s higher probable upside, analysts clearly believe Merchants Bancorp is more favorable than ECB Bancorp.

Summary

Merchants Bancorp beats ECB Bancorp on 11 of the 15 factors compared between the two stocks.

About ECB Bancorp

ECB Bancorp, Inc. operating as a holding company for Everett Co-operative Bank that provides various banking products and services. The company accepts various deposit products, including certificate of deposit accounts, IRAs, money market accounts, savings accounts, demand deposit accounts, and interest-bearing and noninterest-bearing checking accounts. It also offers one- to four-family residential real estate, commercial real estate and multifamily real estate, construction and land, commercial, and consumer loans, as well as home equity loans and lines of credit. In addition, the company invests in securities, consisting primarily of U.S. government and federal agency obligations, mortgage-backed securities, and corporate bonds. ECB Bancorp, Inc. was founded in 1890 and is based in Everett, Massachusetts.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.