Comparing Macatawa Bank (NASDAQ:MCBC) and Prosperity Bancshares (NASDAQ:PB)

Macatawa Bank (NASDAQ:MCBC) and Prosperity Bancshares (NYSE:PB) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, risk, profitability, earnings, institutional ownership, valuation and dividends.

Risk and Volatility

Macatawa Bank has a beta of 0.5, meaning that its share price is 50% less volatile than the S&P 500. Comparatively, Prosperity Bancshares has a beta of 1.36, meaning that its share price is 36% more volatile than the S&P 500.

Insider & Institutional Ownership

32.0% of Macatawa Bank shares are owned by institutional investors. Comparatively, 83.5% of Prosperity Bancshares shares are owned by institutional investors. 8.6% of Macatawa Bank shares are owned by company insiders. Comparatively, 4.9% of Prosperity Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Macatawa Bank and Prosperity Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Macatawa Bank $86.54 million 4.21 $26.37 million $0.78 13.71
Prosperity Bancshares $843.22 million 5.80 $321.81 million $4.61 15.35

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

Profitability

This table compares Macatawa Bank and Prosperity Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Macatawa Bank 31.79% 15.18% 1.52%
Prosperity Bancshares 38.27% 8.12% 1.47%

Dividends

Macatawa Bank pays an annual dividend of $0.28 per share and has a dividend yield of 2.6%. Prosperity Bancshares pays an annual dividend of $1.64 per share and has a dividend yield of 2.3%. Macatawa Bank pays out 35.9% of its earnings in the form of a dividend. Prosperity Bancshares pays out 35.6% 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. Macatawa Bank has raised its dividend for 3 consecutive years and Prosperity Bancshares has raised its dividend for 15 consecutive years.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Macatawa Bank and Prosperity Bancshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Macatawa Bank 0 0 0 0 N/A
Prosperity Bancshares 1 4 2 0 2.14

Prosperity Bancshares has a consensus price target of $73.34, suggesting a potential upside of 3.62%. Given Prosperity Bancshares’ higher probable upside, analysts plainly believe Prosperity Bancshares is more favorable than Macatawa Bank.

Summary

Prosperity Bancshares beats Macatawa Bank on 12 of the 16 factors compared between the two stocks.

Macatawa Bank Company Profile

Macatawa Bank Corporation operates as the bank holding company for Macatawa Bank that provides commercial and consumer banking and trust services. The company accepts various deposits, such as checking accounts, savings accounts, time deposits, regular and money market savings accounts, certificates of deposit, and demand deposits. Its loan products include commercial and industrial loans comprising loans to finance operations and equipment; commercial real estate loans, which consist of construction and development, and multi-family and other non-residential real estate loans; retail loans, such as residential mortgage loans; and consumer loans, including automobile loans, home equity lines of credit and installment loans, home improvement loans, deposit account loans, and other loans for household and personal purposes. The company also offers ATM and debit card processing, cash management, and trust and brokerage services. It serves individuals, businesses, associations, churches, nonprofit organizations, financial institutions, and government authorities through 26 branch offices, as well as a lending and operation service facility in Kent County, Ottawa County, and northern Allegan County, Michigan. Macatawa Bank Corporation was founded in 1997 and is headquartered in Holland, Michigan.

Prosperity Bancshares Company Profile

Prosperity Bancshares, Inc. operates as bank holding company for the Prosperity Bank that provides retail and commercial banking services to small and medium-sized businesses, and consumers. It accepts various deposit products, such as demand, savings, money market, and time accounts. The company also offers 1-4 family residential mortgage, commercial mortgage and multifamily residential, commercial and industrial, agricultural real estate, and non-real estate agricultural loans, as well as construction, land development, and other land loans; consumer loans, including automobile, recreational vehicle, boat, home improvement, personal, and deposit account collateralized loans; and consumer durables and home equity loans. In addition, it provides Internet banking and other cash management, mobile banking, trust and wealth management, retail brokerage, mortgage banking, and automated telephone banking services, as well as debit and credit cards. As of December 31, 2018, the company operated 242 full service banking locations comprising 65 in the Houston area, including The Woodlands; 29 in the South Texas area consisting of Corpus Christi and Victoria; 33 in the Dallas/Fort Worth area; 22 in the East Texas area; 29 in the Central Texas area comprising Austin and San Antonio; 34 in the West Texas area, including Lubbock, Midland-Odessa and Abilene; 16 in the Bryan/College Station area; 6 in the Central Oklahoma area; and 8 in the Tulsa, Oklahoma area. Prosperity Bancshares, Inc. was founded in 1983 and is based in Houston, Texas.

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