Comparing Eagle Bancorp (NASDAQ:EGBN) & MainStreet Bancshares (NASDAQ:MNSB)

MainStreet Bancshares (NASDAQ:MNSB) and Eagle Bancorp (NASDAQ:EGBN) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Earnings and Valuation

This table compares MainStreet Bancshares and Eagle Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bancshares	$66.55 million	1.99	$26.58 million	$1.20	14.54
Eagle Bancorp	$309.65 million	2.49	$100.53 million	($1.40)	-18.21

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

Dividends

MainStreet Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 2.3%. Eagle Bancorp pays an annual dividend of $0.66 per share and has a dividend yield of 2.6%. MainStreet Bancshares pays out 33.3% of its earnings in the form of a dividend. Eagle Bancorp pays out -47.1% 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. Eagle Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of current recommendations for MainStreet Bancshares and Eagle Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bancshares	0	0	0	0	0.00
Eagle Bancorp	0	2	0	0	2.00

Eagle Bancorp has a consensus target price of $29.50, suggesting a potential upside of 15.69%. Given Eagle Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Eagle Bancorp is more favorable than MainStreet Bancshares.

Profitability

This table compares MainStreet Bancshares and Eagle Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bancshares	8.34%	5.77%	0.54%
Eagle Bancorp	-5.97%	5.04%	0.54%

Institutional & Insider Ownership

52.3% of MainStreet Bancshares shares are owned by institutional investors. Comparatively, 78.0% of Eagle Bancorp shares are owned by institutional investors. 9.2% of MainStreet Bancshares shares are owned by insiders. Comparatively, 3.1% of Eagle Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Volatility & Risk

MainStreet Bancshares has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Eagle Bancorp has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500.

Summary

Eagle Bancorp beats MainStreet Bancshares on 9 of the 14 factors compared between the two stocks.

About MainStreet Bancshares

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.

About Eagle Bancorp

Eagle Bancorp, Inc. operates as the bank holding company for EagleBank that provides commercial and consumer banking services primarily in the United States. The company also offers various commercial and consumer lending products comprising commercial loans for working capital, equipment purchases, real estate lines of credit, and government contract financing; asset based lending and accounts receivable financing; construction and commercial real estate loans; business equipment financing; consumer home equity lines of credit, personal lines of credit, and term loans; consumer installment loans, such as auto and personal loans; personal credit cards; and residential mortgage loans. In addition, it provides online and mobile banking services; checking and saving accounts; and other deposit services, including cash management services, business sweep accounts, lock boxes, remote deposit captures, account reconciliation services, merchant card services, safety deposit boxes, and automated clearing house origination, as well as after-hours depositories and ATM services. Further, the company offers insurance products and services through a referral program; and treasury management services. The company serves sole proprietors, small and medium-sized businesses, partnerships, corporations, and non-profit organizations and associations, as well as investors. Eagle Bancorp, Inc. was incorporated in 1997 and is headquartered in Bethesda, Maryland.