Bank of Commerce (NASDAQ: BOCH) and Monarch Financial (NASDAQ:MNRK) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, institutional ownership, earnings, risk, profitability, valuation and dividends.

Profitability

This table compares Bank of Commerce and Monarch Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank of Commerce 19.58% 8.66% 0.82%
Monarch Financial 12.93% 13.64% 1.39%

Analyst Ratings

This is a summary of recent recommendations and price targets for Bank of Commerce and Monarch Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank of Commerce 0 1 0 0 2.00
Monarch Financial 0 0 0 0 N/A

Bank of Commerce presently has a consensus target price of $12.00, suggesting a potential upside of 5.26%. Given Bank of Commerce’s higher possible upside, equities research analysts plainly believe Bank of Commerce is more favorable than Monarch Financial.

Dividends

Bank of Commerce pays an annual dividend of $0.12 per share and has a dividend yield of 1.1%. Monarch Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Bank of Commerce pays out 17.9% of its earnings in the form of a dividend. Monarch Financial 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.

Insider & Institutional Ownership

52.2% of Bank of Commerce shares are owned by institutional investors. 6.9% of Bank of Commerce shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Bank of Commerce and Monarch Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bank of Commerce $44.60 million 4.16 $5.25 million $0.67 17.01
Monarch Financial N/A N/A N/A $1.26 14.67

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

Volatility & Risk

Bank of Commerce has a beta of 0.42, indicating that its stock price is 58% less volatile than the S&P 500. Comparatively, Monarch Financial has a beta of 0.63, indicating that its stock price is 37% less volatile than the S&P 500.

Summary

Bank of Commerce beats Monarch Financial on 6 of the 11 factors compared between the two stocks.

Bank of Commerce Company Profile

Bank of Commerce Holdings (Holding Company) is a bank holding company. The Company’s principal business is to serve as a holding company for Redding Bank of Commerce (Bank), which operates under two separate names (Redding Bank of Commerce and Sacramento Bank of Commerce). The Bank operates over four full service facilities in two diverse markets in Northern California. The Bank provides a range of financial services and products for business and retail customers. Its principal products include various types of accounts, such as checking, interest-bearing checking, savings, certificate of deposit and money market deposit. It also offers sweep arrangements, commercial loans, construction loans, term loans, safe deposit boxes and electronic banking services. The primary focus of the Bank is to provide banking and related services to small and mid-sized businesses and not-for-profit organizations, as well as banking services for consumers, primarily business owners and their employees.

Monarch Financial Company Profile

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.

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