Analyzing Meridian (NASDAQ:MRBK) & Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL)

Meridian (NASDAQ:MRBK) and Home Federal Bancorp, Inc. of Louisiana (NASDAQ:HFBL) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, risk, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and price targets for Meridian and Home Federal Bancorp, Inc. of Louisiana, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meridian	1	0	3	0	2.50
Home Federal Bancorp, Inc. of Louisiana	0	1	0	0	2.00

Meridian presently has a consensus price target of $22.00, indicating a potential upside of 17.65%. Given Meridian’s stronger consensus rating and higher probable upside, analysts clearly believe Meridian is more favorable than Home Federal Bancorp, Inc. of Louisiana.

Valuation and Earnings

This table compares Meridian and Home Federal Bancorp, Inc. of Louisiana”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Meridian	$205.49 million	1.09	$21.84 million	$2.06	9.08
Home Federal Bancorp, Inc. of Louisiana	$35.17 million	1.97	$6.17 million	$2.10	10.88

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

Institutional & Insider Ownership

58.6% of Meridian shares are owned by institutional investors. Comparatively, 21.1% of Home Federal Bancorp, Inc. of Louisiana shares are owned by institutional investors. 14.1% of Meridian shares are owned by company insiders. Comparatively, 19.0% of Home Federal Bancorp, Inc. of Louisiana shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Meridian pays an annual dividend of $0.56 per share and has a dividend yield of 3.0%. Home Federal Bancorp, Inc. of Louisiana pays an annual dividend of $0.60 per share and has a dividend yield of 2.6%. Meridian pays out 27.2% of its earnings in the form of a dividend. Home Federal Bancorp, Inc. of Louisiana pays out 28.6% 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. Home Federal Bancorp, Inc. of Louisiana has raised its dividend for 11 consecutive years. Meridian is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Meridian has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500. Comparatively, Home Federal Bancorp, Inc. of Louisiana has a beta of 0.41, meaning that its share price is 59% less volatile than the S&P 500.

Profitability

This table compares Meridian and Home Federal Bancorp, Inc. of Louisiana’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meridian	11.89%	12.29%	0.95%
Home Federal Bancorp, Inc. of Louisiana	17.99%	11.15%	1.02%

Summary

Meridian beats Home Federal Bancorp, Inc. of Louisiana on 10 of the 17 factors compared between the two stocks.

About Meridian

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.

About Home Federal Bancorp, Inc. of Louisiana

Home Federal Bancorp, Inc. of Louisiana operates as the holding company for Home Federal Bank that provides various financial services to individuals, corporate entities, and other organizations. The company accepts various deposits, such as passbook savings, certificates of deposit, and demand deposit accounts. Its loan products include one-to-four family residential real estate loans; commercial real estate secured loans; multi-family residential loans; commercial business loans; land loans; construction loans; home equity and second mortgage loans; lines of credit; and consumer non-real estate loans, including loans secured by deposit accounts, automobile loans, overdrafts, and other unsecured loans. The company operates through branches in Shreveport, Bossier City, Minden, and Benton, Louisiana. The company was founded in 1924 and is based in Shreveport, Louisiana.