Meridian (NASDAQ:MRBK) and Danske Bank A/S (OTCMKTS:DNKEY) Critical Review

Danske Bank A/S (OTCMKTS:DNKEY) and Meridian (NASDAQ:MRBK) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, profitability, dividends, risk and analyst recommendations.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Danske Bank A/S and Meridian, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Danske Bank A/S	1	1	0	1	2.33
Meridian	0	1	1	0	2.50

Meridian has a consensus price target of $16.00, indicating a potential downside of 4.53%. Given Meridian’s stronger consensus rating and higher probable upside, analysts clearly believe Meridian is more favorable than Danske Bank A/S.

Risk and Volatility

Danske Bank A/S has a beta of 0.9, suggesting that its stock price is 10% less volatile than the S&P 500. Comparatively, Meridian has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Valuation & Earnings

This table compares Danske Bank A/S and Meridian”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Danske Bank A/S	$7.61 billion	3.42	$3.09 billion	$1.97	7.79
Meridian	$168.55 million	1.12	$13.24 million	$1.01	16.59

Danske Bank A/S has higher revenue and earnings than Meridian. Danske Bank A/S is trading at a lower price-to-earnings ratio than Meridian, indicating that it is currently the more affordable of the two stocks.

Dividends

Danske Bank A/S pays an annual dividend of $0.77 per share and has a dividend yield of 5.0%. Meridian pays an annual dividend of $0.50 per share and has a dividend yield of 3.0%. Danske Bank A/S pays out 39.1% of its earnings in the form of a dividend. Meridian pays out 49.5% 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. Danske Bank A/S is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Danske Bank A/S and Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Danske Bank A/S	42.04%	13.27%	0.62%
Meridian	6.00%	6.99%	0.49%

Insider & Institutional Ownership

58.6% of Meridian shares are owned by institutional investors. 14.0% of Meridian shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Danske Bank A/S beats Meridian on 11 of the 17 factors compared between the two stocks.

About Danske Bank A/S

Danske Bank A/S provides various banking products and services to corporate, institutional, and international clients. The company offers insurance and pension products, mortgage finance and real-estate brokerage services, asset management and trading services in fixed income products, foreign exchange services, and equities. It also provides advisory services to personal and private banking customers; and business advisory services, including acquisition, change of ownership, strategic development, or international expansion. In addition, the company offers financing, risk management, investment, and financial advisory services for large corporates and institutions; healthcare solutions; and online and mobile banking services. It has operations in Denmark, Finland, Sweden, Norway, the United Kingdom, and internationally. The company was founded in 1871 and is headquartered in Copenhagen, Denmark.

About Meridian

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.