Critical Review: Monarch Financial (NASDAQ:MNRK) and Its Peers

Monarch Financial (NASDAQ: MNRK) is one of 309 publicly-traded companies in the “Banks” industry, but how does it contrast to its rivals? We will compare Monarch Financial to similar companies based on the strength of its valuation, institutional ownership, dividends, profitability, risk, earnings and analyst recommendations.

Earnings & Valuation

This table compares Monarch Financial and its rivals top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Monarch Financial N/A N/A 14.67
Monarch Financial Competitors $5.50 billion $827.87 million 384.61

Monarch Financial’s rivals have higher revenue and earnings than Monarch Financial. Monarch Financial is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Insider & Institutional Ownership

52.0% of shares of all “Banks” companies are held by institutional investors. 10.4% of shares of all “Banks” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent ratings for Monarch Financial and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Monarch Financial 0 0 0 0 N/A
Monarch Financial Competitors 2260 8668 8665 359 2.36

As a group, “Banks” companies have a potential upside of 0.04%. Given Monarch Financial’s rivals higher probable upside, analysts plainly believe Monarch Financial has less favorable growth aspects than its rivals.

Volatility and Risk

Monarch Financial has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Monarch Financial’s rivals have a beta of 0.78, suggesting that their average share price is 22% less volatile than the S&P 500.

Profitability

This table compares Monarch Financial and its rivals’ 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%
Monarch Financial Competitors 18.59% 8.18% 0.92%

Dividends

Monarch Financial pays an annual dividend of $0.36 per share and has a dividend yield of 1.9%. Monarch Financial pays out 28.6% of its earnings in the form of a dividend. As a group, “Banks” companies pay a dividend yield of 1.9% and pay out 34.9% of their earnings in the form of a dividend. Monarch Financial is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Summary

Monarch Financial rivals beat Monarch Financial on 7 of the 11 factors compared.

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.

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