Magyar Bancorp (NASDAQ:MGYR – Get Free Report) and Franklin Financial Services (NASDAQ:FRAF – Get Free Report) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, valuation, risk, dividends, profitability and analyst recommendations.
Dividends
Magyar Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Franklin Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.1%. Magyar Bancorp pays out 21.4% of its earnings in the form of a dividend. Franklin Financial Services pays out 24.8% 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. Magyar Bancorp has increased its dividend for 3 consecutive years and Franklin Financial Services has increased its dividend for 1 consecutive years.
Volatility and Risk
Magyar Bancorp has a beta of 0.22, suggesting that its share price is 78% less volatile than the S&P 500. Comparatively, Franklin Financial Services has a beta of -0.02, suggesting that its share price is 102% less volatile than the S&P 500.
Analyst Recommendations
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Magyar Bancorp | 0 | 1 | 0 | 0 | 2.00 |
| Franklin Financial Services | 0 | 1 | 1 | 0 | 2.50 |
Franklin Financial Services has a consensus target price of $64.00, indicating a potential downside of 0.09%. Given Franklin Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe Franklin Financial Services is more favorable than Magyar Bancorp.
Profitability
This table compares Magyar Bancorp and Franklin Financial Services’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Magyar Bancorp | 18.89% | 9.69% | 1.14% |
| Franklin Financial Services | 18.20% | 14.21% | 1.08% |
Institutional & Insider Ownership
46.3% of Magyar Bancorp shares are held by institutional investors. Comparatively, 24.8% of Franklin Financial Services shares are held by institutional investors. 11.1% of Magyar Bancorp shares are held by company insiders. Comparatively, 5.9% of Franklin Financial Services 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.
Earnings and Valuation
This table compares Magyar Bancorp and Franklin Financial Services”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Magyar Bancorp | $39.21 million | 3.13 | $9.76 million | $1.87 | 10.17 |
| Franklin Financial Services | $133.55 million | 2.15 | $21.23 million | $5.49 | 11.67 |
Franklin Financial Services has higher revenue and earnings than Magyar Bancorp. Magyar Bancorp is trading at a lower price-to-earnings ratio than Franklin Financial Services, indicating that it is currently the more affordable of the two stocks.
Summary
Franklin Financial Services beats Magyar Bancorp on 9 of the 17 factors compared between the two stocks.
About Magyar Bancorp
Magyar Bancorp, Inc. operates as the holding company for Magyar Bank that provides various consumer and commercial banking services to individuals, businesses, and nonprofit organizations in New Jersey, the United States. It accepts various deposit accounts, including demand, savings, NOW, money market, and retirement accounts, as well as certificates of deposit. The company also provides residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans, and construction loans, as well as small business administration loans. In addition, it offers non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers; and buys, sells, and holds investment securities. The company has branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. Magyar Bancorp, Inc. was founded in 1922 and is headquartered in New Brunswick, New Jersey.
About Franklin Financial Services
Franklin Financial Services Corporation operates as the bank holding company for Farmers and Merchants Trust Company of Chambersburg that provides commercial, retail banking, and trust services to businesses, individuals, governmental entities, and non-profit organizations in Pennsylvania. It offers various deposit products, including checking, savings, money management, and time deposit accounts, as well as demand deposits. The company also provides commercial real estate, construction and land development, commercial and industrial, and residential mortgage loans, as well as installment and revolving loans; consumer loans comprising unsecured personal lines of credit and installment loans; and secured and unsecured commercial and industrial loans, including accounts receivable and inventory financing, and commercial equipment financing. In addition, it offers various investment and trust services comprising estate planning and administration, corporate and personal trust fund management, pension, and profit sharing and other employee benefit funds management services, and custodial services, as well as non-trust related investment services; sells mutual funds, annuities, and insurance products; and offers safe deposit, pension, and fiduciary services. Further, the company engages in non-bank investment activities, such as venture capital investments. The company was founded in 1906 and is headquartered in Chambersburg, Pennsylvania.
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