Monarch Financial (MNRK) vs. Park Sterling (PSTB) Critical Comparison

Monarch Financial (NASDAQ: MNRK) and Park Sterling (NASDAQ:PSTB) are both small-cap banks – nec companies, but which is the better stock? We will compare the two companies based on the strength of their dividends, institutional ownership, analyst recommendations, profitability, valuation, earnings and risk.

Analyst Ratings

This is a breakdown of current ratings for Monarch Financial and Park Sterling, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monarch Financial 0 0 0 0 N/A
Park Sterling 0 2 0 0 2.00

Profitability

This table compares Monarch Financial and Park Sterling’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Monarch Financial 12.93% 13.64% 1.39%
Park Sterling 26.18% 9.35% 1.06%

Risk and Volatility

Monarch Financial has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, Park Sterling has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Insider and Institutional Ownership

82.6% of Park Sterling shares are held by institutional investors. 7.3% of Park Sterling shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Monarch Financial and Park Sterling’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Monarch Financial N/A N/A N/A $1.26 14.67
Park Sterling $140.91 million 4.86 $19.94 million $0.56 22.98

Park Sterling has higher revenue and earnings than Monarch Financial. Monarch Financial is trading at a lower price-to-earnings ratio than Park Sterling, indicating that it is currently the more affordable of the two stocks.

Dividends

Monarch Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Park Sterling pays an annual dividend of $0.16 per share and has a dividend yield of 1.2%. Monarch Financial pays out 28.6% of its earnings in the form of a dividend. Park Sterling pays out 28.6% 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.

Summary

Park Sterling beats Monarch Financial on 6 of the 10 factors compared between the two stocks.

About Monarch Financial

Monarch Financial Holdings, Inc. (Monarch) is a Virginia-chartered bank holding company. The Company is engaged in commercial and retail banking; investment and insurance sales, and mortgage origination and brokerage. The Company conducts its operations through its subsidiary, Monarch Bank (the Bank), and its two subsidiaries, Monarch Investment, LLC and Monarch Capital, LLC. The Company operates through two segments: community banking (banking) and retail mortgage banking services (mortgage banking). The Company’s community banking segment involves making loans to and generating deposits from individuals and businesses. Monarch’s mortgage banking services consist of originating residential loans and subsequently selling them to investors. Monarch also does business in various markets, such as OBX Bank, Monarch Bank Private Wealth, Monarch Mortgage and under various names through joint ventures with other partners.

About Park Sterling

Park Sterling Corporation is a holding company for Park Sterling Bank (the Bank). The Bank is a North Carolina-chartered commercial non-member bank. The Company provides banking services to small and medium-sized businesses, real estate owners, residential builders, institutions, professionals and consumers doing business or residing within its target markets. It provides a range of banking products, including personal, business and non-profit checking accounts, interest on lawyer trust accounts (IOLTA), individual retirement accounts, business and personal money market accounts, time deposits, overdraft protection, safe deposit boxes, and online and mobile banking. Its wealth management activities include investment management, private banking, personal trust and investment brokerage services. Its cash management activities include remote deposit capture, lockbox services, sweep accounts, purchasing cards, automated clearing house (ACH) and wire payments.

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