Analyzing Meridian Bancorp (NASDAQ:EBSB) and Trustmark (NASDAQ:TRMK)

Meridian Bancorp (NASDAQ:EBSB) and Trustmark (NASDAQ:TRMK) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, dividends, profitability, valuation, analyst recommendations, institutional ownership and earnings.

Insider and Institutional Ownership

65.0% of Meridian Bancorp shares are held by institutional investors. Comparatively, 68.0% of Trustmark shares are held by institutional investors. 4.8% of Meridian Bancorp shares are held by company insiders. Comparatively, 1.5% of Trustmark shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

Meridian Bancorp pays an annual dividend of $0.28 per share and has a dividend yield of 1.6%. Trustmark pays an annual dividend of $0.92 per share and has a dividend yield of 2.7%. Meridian Bancorp pays out 26.4% of its earnings in the form of a dividend. Trustmark pays out 41.6% 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 Bancorp has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of recent recommendations and price targets for Meridian Bancorp and Trustmark, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Meridian Bancorp 0 1 1 0 2.50
Trustmark 2 2 0 0 1.50

Meridian Bancorp presently has a consensus target price of $17.50, suggesting a potential downside of 2.45%. Trustmark has a consensus target price of $32.33, suggesting a potential downside of 4.85%. Given Meridian Bancorp’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Meridian Bancorp is more favorable than Trustmark.

Profitability

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

Net Margins Return on Equity Return on Assets
Meridian Bancorp 22.96% 8.77% 0.97%
Trustmark 21.20% 9.28% 1.10%

Earnings & Valuation

This table compares Meridian Bancorp and Trustmark’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Meridian Bancorp $236.68 million 4.04 $55.77 million $1.06 16.92
Trustmark $683.25 million 3.20 $149.58 million $2.21 15.38

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

Volatility & Risk

Meridian Bancorp has a beta of 0.52, suggesting that its stock price is 48% less volatile than the S&P 500. Comparatively, Trustmark has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Summary

Meridian Bancorp beats Trustmark on 9 of the 17 factors compared between the two stocks.

About Meridian Bancorp

Meridian Bancorp, Inc. operates as the holding company for East Boston Savings Bank that provides various financial products and services for individuals and businesses primarily in Suffolk, Norfolk, Middlesex and Essex Counties, Massachusetts. The company accepts various deposit products, including non-interest-bearing demand deposits, such as checking accounts; interest-bearing demand accounts comprising NOW and money market accounts; savings accounts; and certificates of deposits, as well as commercial checking accounts. Its loan portfolio includes commercial real estate loans, which are secured by properties used for business purposes, such as office buildings, industrial facilities, and retail facilities; one- to four-family residential loans comprising mortgage loans that enable borrowers to purchase or refinance existing homes; multi-family real estate loans; construction loans; commercial and industrial loans; home equity lines of credit; and consumer loans that include automobile loans, loans secured by savings or certificate accounts, credit builders, and annuity and overdraft loans. In addition, the company offers non-deposit financial products, which comprise mutual funds, annuities, stocks, and bonds through a third-party broker-dealer; and long-term care insurance products. Further, it is also involved in the securities transactions business; and holding foreclosed real estate properties. The company operates 37 full-service locations, as well as 1 mobile branch and 3 loan centers. Meridian Bancorp, Inc. was founded in 1848 and is headquartered in Peabody, Massachusetts.

About Trustmark

Trustmark Corporation operates as the bank holding company for Trustmark National Bank that provides banking and other financial solutions to individuals and corporate institutions in the United States. The company offers checking, savings, and money market accounts; individual retirement accounts; certificates of deposits; financing for commercial and industrial projects, income producing commercial real estate, owner-occupied real estate, and construction and land development; and installment and real estate loans, and lines of credit. It also provides mortgage banking services, including construction financing, production of conventional and government insured mortgages, and secondary marketing and mortgage servicing; overdraft facilities; and treasury management services. In addition, the company offers business insurance products and services for medical professionals, construction, manufacturing, hospitality, real estate, and group life and health plans; and life and health insurance, and personal line policies for individual customers, as well as provides an intermediary vehicle for the provision of loans or investments in low-income communities. Further, it engages in the administration of personal trusts and estates; management of investment accounts for individuals, employee benefit plans, and charitable foundations; and provision of corporate trust and institutional custody, securities brokerage, financial and estate planning, retirement plan, and investment management services. As of December 31, 2018, the company operated 181 full-service branches and 14 limited-service branches; 178 ATMs and 4 interactive teller machines (ITMs) at on-premise locations; and 61 ATMs and 3 ITMs at off-premise locations. Trustmark Corporation was founded in 1889 and is headquartered in Jackson, Mississippi.

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