Truist Financial (NYSE:TFC – Get Free Report) and Meridian (NASDAQ:MRBK – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.
Profitability
This table compares Truist Financial and Meridian’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Truist Financial | -3.28% | 9.64% | 0.96% |
| Meridian | 7.86% | 8.54% | 0.59% |
Insider and Institutional Ownership
71.3% of Truist Financial shares are owned by institutional investors. Comparatively, 58.6% of Meridian shares are owned by institutional investors. 0.2% of Truist Financial 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, large money managers and endowments believe a company is poised for long-term growth.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Truist Financial | 0 | 7 | 9 | 0 | 2.56 |
| Meridian | 0 | 1 | 0 | 0 | 2.00 |
Truist Financial presently has a consensus price target of $41.47, suggesting a potential upside of 16.28%. Meridian has a consensus price target of $13.00, suggesting a potential upside of 55.50%. Given Meridian’s higher probable upside, analysts plainly believe Meridian is more favorable than Truist Financial.
Dividends
Truist Financial pays an annual dividend of $2.08 per share and has a dividend yield of 5.8%. Meridian pays an annual dividend of $0.50 per share and has a dividend yield of 6.0%. Truist Financial pays out -192.6% of its earnings in the form of a dividend. Meridian pays out 43.5% 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. Meridian has raised its dividend for 1 consecutive years. Meridian is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Truist Financial and Meridian’s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Truist Financial | $23.39 billion | 2.03 | -$1.09 billion | ($1.08) | -33.02 |
| Meridian | $168.55 million | 0.56 | $13.24 million | $1.15 | 7.27 |
Meridian has lower revenue, but higher earnings than Truist Financial. Truist Financial is trading at a lower price-to-earnings ratio than Meridian, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Truist Financial has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500. Comparatively, Meridian has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.
Summary
Truist Financial beats Meridian on 9 of the 17 factors compared between the two stocks.
About Truist Financial
Truist Financial Corporation, a financial services company, provides banking and trust services in the Southeastern and Mid-Atlantic United States. The company operates through three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings. Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, and money market deposit accounts, as well as certificates of deposit and individual retirement accounts. The company provides funding; asset management; automobile lending; credit card lending; consumer finance; home equity and mortgage lending; other direct retail lending; insurance; investment brokerage; mobile/online banking; payment solutions; point-of-sale lending; retail and small business deposit products; small business lending; and wealth management/private banking services. In addition, it offers asset based lending, investment banking and capital market, institutional trust, insurance premium finance, derivatives, commercial lending, international banking, leasing, merchant, commercial deposit and treasury, floor plan, mortgage warehouse lending, real estate lending, and supply chain financing services. Further, the company provides insurance brokerage, retail and wholesale brokerage, securities underwriting and market making, loan syndication, and investment management and advisory services. The company was formerly known as BB&T Corporation and changed its name to Truist Financial Corporation in December 2019. Truist Financial Corporation was founded in 1872 and is headquartered in Charlotte, North Carolina.
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.
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