Comparing CBTX (NASDAQ:CBTX) & Meridian (NASDAQ:MRBK)

Meridian (NASDAQ:MRBKGet Rating) and CBTX (NASDAQ:CBTXGet Rating) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, valuation, institutional ownership, risk, earnings, dividends and profitability.

Profitability

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

Net Margins Return on Equity Return on Assets
Meridian 22.31% 22.95% 2.05%
CBTX 24.00% 6.39% 0.85%

Insider and Institutional Ownership

53.5% of Meridian shares are owned by institutional investors. Comparatively, 38.9% of CBTX shares are owned by institutional investors. 13.4% of Meridian shares are owned by company insiders. Comparatively, 26.0% of CBTX shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Meridian has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, CBTX has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and recommmendations for Meridian and CBTX, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meridian 0 0 1 0 3.00
CBTX 0 0 0 0 N/A

Meridian presently has a consensus price target of $45.00, indicating a potential upside of 40.63%. Given Meridian’s higher possible upside, equities research analysts plainly believe Meridian is more favorable than CBTX.

Dividends

Meridian pays an annual dividend of $0.80 per share and has a dividend yield of 2.5%. CBTX pays an annual dividend of $0.52 per share and has a dividend yield of 1.8%. Meridian pays out 13.9% of its earnings in the form of a dividend. CBTX pays out 35.6% 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. Meridian has increased its dividend for 1 consecutive years and CBTX has increased its dividend for 1 consecutive years. Meridian is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Meridian and CBTX’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meridian $159.51 million 1.23 $35.58 million $5.74 5.57
CBTX $148.36 million 4.76 $35.60 million $1.46 19.66

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

Summary

Meridian beats CBTX on 9 of the 15 factors compared between the two stocks.

Meridian Company Profile (Get Rating)

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, 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, and shared national credits; 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. It operates through a network of 6 full-service branches, and 19 other offices. The company was founded in 2004 and is headquartered in Malvern, Pennsylvania.

CBTX Company Profile (Get Rating)

CBTX, Inc. operates as the bank holding company for CommunityBank of Texas, National Association that provides commercial banking products and services to small and mid-sized businesses, and professionals in the United States. The company offers demand, money market, savings, and time deposit accounts, as well as certificates of deposit; commercial and industrial, commercial real estate, construction and development, 1-4 family residential mortgage, multi-family residential, consumer, and agricultural loans; and treasury and online banking services. It operates through 34 banking locations, including 18 branches in Houston; 15 branches in Beaumont; and one branch in Dallas. The company was formerly known as CBFH, Inc. and changed its name to CBTX, Inc. in September 2017. CBTX, Inc. was incorporated in 2007 and is headquartered in Beaumont, Texas.

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