Critical Analysis: Suruga Bank (OTCMKTS:SUGBY) and Northeast Bancorp (NASDAQ:NBN)

Northeast Bancorp (NASDAQ:NBN) and Suruga Bank (OTCMKTS:SUGBY) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings for Northeast Bancorp and Suruga Bank, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	1	0	2.50
Suruga Bank	0	0	0	0	0.00

Northeast Bancorp currently has a consensus target price of $102.00, indicating a potential downside of 4.36%. Given Northeast Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Northeast Bancorp is more favorable than Suruga Bank.

Risk and Volatility

Northeast Bancorp has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500. Comparatively, Suruga Bank has a beta of -0.08, indicating that its share price is 108% less volatile than the S&P 500.

Valuation & Earnings

This table compares Northeast Bancorp and Suruga Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$351.00 million	2.49	$83.44 million	$10.64	10.02
Suruga Bank	$598.19 million	2.64	$133.17 million	$9.26	8.64

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

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Suruga Bank pays an annual dividend of $2.09 per share and has a dividend yield of 2.6%. Northeast Bancorp pays out 0.4% of its earnings in the form of a dividend. Suruga Bank pays out 22.6% 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.

Profitability

This table compares Northeast Bancorp and Suruga Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	24.36%	18.52%	2.12%
Suruga Bank	24.79%	8.90%	0.77%

Summary

Northeast Bancorp beats Suruga Bank on 9 of the 14 factors compared between the two stocks.

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.

About Suruga Bank

Suruga Bank Ltd. provides various banking and financial products and services to individuals and corporate customers in Japan. The company offers deposit products, such as time, ordinary, savings, foreign currency, and other deposits, as well as current and general accounts; card, housing, second house, startup, and business up term loans, as well as loans by purpose; credit and debit cards; overdrafts; and other financing products. It also provides investment trust, public bond, pension contribution, insurance, inheritance/trust, lottery, foreign currency, pay-easy, web direct, safe deposit box, external linkage, foreign remittance, fund management, e-combination, payment, nursing care/medical care/dispensing compensation receivable factoring, mortgage, and Internet and telephone banking services. In addition, the company offers staffing, money lending, guarantee, printing, leasing, and agency services. The company was incorporated in 1895 and is headquartered in Numazu, Japan.