Prime Meridian (OTCMKTS:PMHG) & State Street (NYSE:STT) Financial Contrast

Prime Meridian (OTCMKTS:PMHG) and State Street (NYSE:STT) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their risk, dividends, earnings, valuation, institutional ownership, profitability and analyst recommendations.

Dividends

Prime Meridian pays an annual dividend of $0.25 per share and has a dividend yield of 1.0%. State Street pays an annual dividend of $3.04 per share and has a dividend yield of 3.3%. Prime Meridian pays out 10.0% of its earnings in the form of a dividend. State Street pays out 56.9% 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. State Street has raised its dividend for 13 consecutive years. State Street is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

11.8% of Prime Meridian shares are held by institutional investors. Comparatively, 87.4% of State Street shares are held by institutional investors. 25.9% of Prime Meridian shares are held by insiders. Comparatively, 0.3% of State Street shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Prime Meridian and State Street”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Meridian	$41.82 million	2.03	$8.71 million	$2.50	10.28
State Street	$12.62 billion	2.21	$1.94 billion	$5.34	17.33

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Prime Meridian and State Street, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Meridian	0	0	0	0	N/A
State Street	2	6	5	0	2.23

State Street has a consensus price target of $91.39, indicating a potential downside of 1.26%. Given State Street’s higher probable upside, analysts plainly believe State Street is more favorable than Prime Meridian.

Profitability

This table compares Prime Meridian and State Street’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prime Meridian	16.71%	9.58%	0.89%
State Street	8.98%	11.78%	0.83%

Risk and Volatility

Prime Meridian has a beta of 0.51, suggesting that its share price is 49% less volatile than the S&P 500. Comparatively, State Street has a beta of 1.48, suggesting that its share price is 48% more volatile than the S&P 500.

Summary

State Street beats Prime Meridian on 12 of the 16 factors compared between the two stocks.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.

About State Street

State Street Corporation, through its subsidiaries, provides a range of financial products and services to institutional investors worldwide. The company offers investment servicing products and services, including custody, accounting, regulatory reporting, investor, and performance and analytics; middle office products, such as IBOR, transaction management, loans, cash, derivatives and collateral, record keeping, and client reporting and investment analytics; finance leasing; foreign exchange, and brokerage and other trading services; securities finance and enhanced custody products; deposit and short-term investment facilities; investment manager and alternative investment manager operations outsourcing; performance, risk, and compliance analytics; and financial data management to support institutional investors. It also engages in the provision of portfolio management and risk analytics, as well as trading and post-trade settlement services with integrated compliance and managed data. In addition, the company offers investment management strategies and products, such as core and enhanced indexing, multi-asset strategies, active quantitative and fundamental active capabilities, and alternative investment strategies. Further, it provides services and solutions, including environmental, social, and governance investing; defined benefit and defined contribution; and global fiduciary solutions, as well as exchange-traded funds under the SPDR ETF brand. The company provides its products and services to mutual funds, collective investment funds, UCITS, hedge funds and other investment pools, corporate and public retirement plans, insurance companies, foundations, endowments, and investment managers. State Street Corporation was founded in 1792 and is headquartered in Boston, Massachusetts.