Critical Analysis: Meridian (NASDAQ:MRBK) versus Guaranty Bancshares (NASDAQ:GNTY)

Guaranty Bancshares (NASDAQ:GNTY) and Meridian (NASDAQ:MRBK) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, dividends, earnings and profitability.

Analyst Ratings

This is a breakdown of recent ratings for Guaranty Bancshares and Meridian, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Guaranty Bancshares	0	2	1	0	2.33
Meridian	0	1	1	0	2.50

Guaranty Bancshares presently has a consensus target price of $37.33, indicating a potential downside of 8.98%. Meridian has a consensus target price of $16.00, indicating a potential upside of 0.63%. Given Meridian’s stronger consensus rating and higher probable upside, analysts clearly believe Meridian is more favorable than Guaranty Bancshares.

Dividends

Guaranty Bancshares pays an annual dividend of $0.96 per share and has a dividend yield of 2.3%. Meridian pays an annual dividend of $0.50 per share and has a dividend yield of 3.1%. Guaranty Bancshares pays out 34.9% of its earnings in the form of a dividend. Meridian pays out 49.5% 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.

Risk and Volatility

Guaranty Bancshares has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500. Comparatively, Meridian has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500.

Insider and Institutional Ownership

39.4% of Guaranty Bancshares shares are owned by institutional investors. Comparatively, 58.6% of Meridian shares are owned by institutional investors. 26.4% of Guaranty Bancshares shares are owned by company insiders. Comparatively, 14.0% of Meridian shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Guaranty Bancshares and Meridian”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Guaranty Bancshares	$183.90 million	2.55	$30.04 million	$2.75	14.91
Meridian	$168.55 million	1.06	$13.24 million	$1.01	15.74

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Guaranty Bancshares	17.15%	10.13%	1.02%
Meridian	6.00%	6.99%	0.49%

Summary

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

About Guaranty Bancshares

Guaranty Bancshares, Inc. operates as the bank holding company for Guaranty Bank & Trust, N.A. that provides a range of commercial and consumer banking products and services for small- and medium-sized businesses, professionals, and individuals. The company offers checking and savings, money market, and business accounts, as well as certificates of deposit; and commercial and industrial, construction and development, 1-4 family residential, commercial real estate, farmland, agricultural, multi-family residential, and consumer loans. It also provides trustee, custodial and escrow, investment management, retirement plan, ATM, night depository, direct deposit, and cashier's check services, as well as online and mobile banking services; debit cards; letters of credit; and treasury management services, including wire transfer, positive pay, remote deposit capture, and automated clearinghouse services. Guaranty Bancshares, Inc. was founded in 1913 and is headquartered in Addison, Texas.

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.