Head to Head Contrast: Merchants Bancorp (NASDAQ:MBIN) versus Carter Bankshares (NASDAQ:CARE)
by Danessa Lincoln · The Markets DailyCarter Bankshares (NASDAQ:CARE – Get Free Report) and Merchants Bancorp (NASDAQ:MBIN – Get Free Report) are both 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.
Profitability
This table compares Carter Bankshares and Merchants Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Carter Bankshares | 36.79% | 7.46% | 0.73% |
| Merchants Bancorp | 19.80% | 15.29% | 1.34% |
Valuation and Earnings
This table compares Carter Bankshares and Merchants Bancorp”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Carter Bankshares | $254.63 million | 2.62 | $31.00 million | $5.81 | 5.18 |
| Merchants Bancorp | $1.37 billion | 1.76 | $218.77 million | $4.98 | 10.49 |
Merchants Bancorp has higher revenue and earnings than Carter Bankshares. Carter Bankshares is trading at a lower price-to-earnings ratio than Merchants Bancorp, indicating that it is currently the more affordable of the two stocks.
Dividends
Carter Bankshares pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Merchants Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 0.8%. Carter Bankshares pays out 6.9% of its earnings in the form of a dividend. Merchants Bancorp pays out 8.8% 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. Merchants Bancorp has increased its dividend for 8 consecutive years. Carter Bankshares is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of recent ratings for Carter Bankshares and Merchants Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Carter Bankshares | 0 | 4 | 1 | 0 | 2.20 |
| Merchants Bancorp | 0 | 2 | 2 | 1 | 2.80 |
Carter Bankshares currently has a consensus target price of $30.75, indicating a potential upside of 2.26%. Merchants Bancorp has a consensus target price of $55.50, indicating a potential upside of 6.26%. Given Merchants Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Merchants Bancorp is more favorable than Carter Bankshares.
Volatility & Risk
Carter Bankshares has a beta of 0.5, indicating that its share price is 50% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500.
Insider and Institutional Ownership
41.5% of Carter Bankshares shares are owned by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are owned by institutional investors. 2.4% of Carter Bankshares shares are owned by insiders. Comparatively, 44.9% of Merchants Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Summary
Merchants Bancorp beats Carter Bankshares on 12 of the 18 factors compared between the two stocks.
About Carter Bankshares
Carter Bankshares, Inc. operates as the bank holding company for Carter Bank & Trust that provides various banking products and services in the United States. It accepts various deposit products, including checking, savings, retirement, and money market accounts, as well as certificates of deposits. The company also offers commercial loans comprising secured and unsecured loans; consumer loans, such as secured and unsecured loans for financing automobiles, home improvements, education, overdraft protection, and personal investments, as well as residential mortgages; real estate construction, acquisition, commercial, and industrial loans; home equity lines of credit; and credit cards, as well as originates and holds fixed and variable rate mortgage loans. In addition, it provides other banking services that include safe deposit boxes, direct deposit of payroll, and social security checks; online banking products, including online and mobile banking, online account opening, bill pay, e-statement, mobile deposit, digital wallet, and ATM services; title insurance and other financial institution-related products and services; and treasury and corporate cash management services. Carter Bankshares, Inc. was founded in 1974 and is headquartered in Martinsville, Virginia.
About Merchants Bancorp
Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.