Head-To-Head Analysis: Franklin Financial Network (FSB) versus Monarch Financial (MNRK)

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

Analyst Ratings

This is a breakdown of recent ratings and target prices for Monarch Financial and Franklin Financial Network, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monarch Financial 0 0 0 0 N/A
Franklin Financial Network 0 4 1 0 2.20

Franklin Financial Network has a consensus target price of $40.20, suggesting a potential upside of 17.37%. Given Franklin Financial Network’s higher probable upside, analysts clearly believe Franklin Financial Network is more favorable than Monarch Financial.

Dividends

Monarch Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Franklin Financial Network does not pay a dividend. Monarch Financial pays out 28.6% of its earnings in the form of a dividend.

Institutional and Insider Ownership

54.9% of Franklin Financial Network shares are held by institutional investors. 10.6% of Franklin Financial Network shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Volatility & Risk

Monarch Financial has a beta of 0.63, meaning that its share price is 37% less volatile than the S&P 500. Comparatively, Franklin Financial Network has a beta of 0.91, meaning that its share price is 9% less volatile than the S&P 500.

Profitability

This table compares Monarch Financial and Franklin Financial Network’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%
Franklin Financial Network 23.70% 11.48% 0.98%

Earnings and Valuation

This table compares Monarch Financial and Franklin Financial Network’s top-line 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
Franklin Financial Network $115.05 million 3.94 $28.05 million $2.48 13.81

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

Summary

Franklin Financial Network beats Monarch Financial on 9 of the 13 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 Franklin Financial Network

Franklin Financial Network, Inc. is a financial holding company. Through its bank subsidiary, Franklin Synergy Bank (the Bank), a commercial bank, the Company provides a range of banking and related financial services. The Company focuses on the provision of services to small businesses, corporate entities, local governments and individuals. As of December 31, 2016, the Company operated through 12 branches in Williamson and Rutherford counties and a loan production office within the Nashville metropolitan area. The Company’s loan portfolio consists of real estate loans, including construction and land development loans, commercial loans and residential loans; commercial and industrial, and consumer and other loans. The Company’s investment securities portfolio consists of both securities classified as available-for-sale and securities classified as held-to-maturity. The Company’s primary sources of funds include deposits.

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