Critical Review: Provident Bancorp (NASDAQ:PVBC) and Madison County Financial (NASDAQ:MCBK)

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Provident Bancorp (NASDAQ:PVBC) and Madison County Financial (OTCMKTS:MCBK) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Provident Bancorp and Madison County Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Provident Bancorp 0 0 1 0 3.00
Madison County Financial 0 0 0 0 N/A

Provident Bancorp presently has a consensus target price of $13.00, indicating a potential upside of 10.64%. Given Provident Bancorp’s higher probable upside, equities research analysts clearly believe Provident Bancorp is more favorable than Madison County Financial.

Profitability

This table compares Provident Bancorp and Madison County Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Provident Bancorp 20.66% 8.63% 1.11%
Madison County Financial 27.40% 7.41% 1.33%

Insider & Institutional Ownership

11.0% of Provident Bancorp shares are held by institutional investors. 3.3% of Provident Bancorp shares are held by insiders. Comparatively, 16.9% of Madison County Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Madison County Financial pays an annual dividend of $0.51 per share and has a dividend yield of 1.9%. Provident Bancorp does not pay a dividend.

Earnings and Valuation

This table compares Provident Bancorp and Madison County Financial’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Provident Bancorp $46.52 million 4.91 $9.32 million N/A N/A
Madison County Financial $19.41 million 3.65 $5.58 million N/A N/A

Provident Bancorp has higher revenue and earnings than Madison County Financial.

Risk and Volatility

Provident Bancorp has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Madison County Financial has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500.

Summary

Provident Bancorp beats Madison County Financial on 9 of the 13 factors compared between the two stocks.

About Provident Bancorp

Provident Bancorp, Inc. is a Massachusetts corporation that was formed in 2011 by The Provident Bank to be its holding company. Approximately 52.1% of Provident Bancorp, Inc. outstanding shares are owned by Provident Bancorp, a Massachusetts corporation and a mutual holding company. The Provident Bank, a subsidiary of Provident Bancorp, Inc., is an innovative, commercial bank that finds solutions for business and private clients. We are committed to strengthening the economic development of the regions we serve, by working closely with businesses and private clients and delivering superior products and high-touch services to meet their banking needs. The Provident has offices in Massachusetts and New Hampshire. All deposits are insured in full through a combination of insurance provided by the Federal Deposit Insurance Corporation (FDIC) and the Depositors Insurance Fund (DIF).

About Madison County Financial

Madison County Financial, Inc. operates as the holding company for Madison County Bank, provides banking and financial services to individual and corporate customers in Nebraska, the United States. It offers deposits, such as checking accounts, savings accounts, and certificates of deposit, and time deposits; debt securities; and debit cards. The company also provides agricultural real estate, machinery and equipment, livestock and crop, and operating loans; real estate, construction, investment property, and working capital loans, as well as equipment financing; residential mortgage loans, including conventional, portfolio, and construction home loans; government loans; home equity lines of credit; second mortgages; and home improvement, automobiles, trucks and vans, recreational vehicles, and personal loans, as well as overdraft protection services. In addition, it provides online banking, such as mobile banking and deposit, bill pay, and estatement services. The company was formerly known as Madison County Holding Company and changed its name to Madison County Financial, Inc. in October 2012. Madison County Financial, Inc. was founded in 1888 and is headquartered in Madison, Nebraska.

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