Critical Analysis: Bridgewater Bancshares (NASDAQ:BWB) and Middlefield Banc (NASDAQ:MBCN)

Bridgewater Bancshares (NASDAQ:BWB) and Middlefield Banc (NASDAQ:MBCN) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, risk, analyst recommendations, earnings, dividends, profitability and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings for Bridgewater Bancshares and Middlefield Banc, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bridgewater Bancshares	0	3	2	0	2.40
Middlefield Banc	0	2	1	0	2.33

Bridgewater Bancshares currently has a consensus price target of $22.33, indicating a potential upside of 16.38%. Middlefield Banc has a consensus price target of $35.00, indicating a potential downside of 0.11%. Given Bridgewater Bancshares’ stronger consensus rating and higher possible upside, research analysts clearly believe Bridgewater Bancshares is more favorable than Middlefield Banc.

Insider & Institutional Ownership

65.8% of Bridgewater Bancshares shares are owned by institutional investors. Comparatively, 31.7% of Middlefield Banc shares are owned by institutional investors. 23.3% of Bridgewater Bancshares shares are owned by company insiders. Comparatively, 4.1% of Middlefield Banc shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Bridgewater Bancshares and Middlefield Banc”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bridgewater Bancshares	$292.76 million	1.81	$46.09 million	$1.50	12.79
Middlefield Banc	$116.64 million	2.43	$19.42 million	$2.39	14.66

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

Risk and Volatility

Bridgewater Bancshares has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, Middlefield Banc has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500.

Profitability

This table compares Bridgewater Bancshares and Middlefield Banc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bridgewater Bancshares	15.74%	11.07%	0.87%
Middlefield Banc	16.65%	8.91%	1.01%

Summary

Bridgewater Bancshares beats Middlefield Banc on 9 of the 14 factors compared between the two stocks.

About Bridgewater Bancshares

Bridgewater Bancshares, Inc. operates as the bank holding company for Bridgewater Bank that provides banking products and services to commercial real estate investors, entrepreneurs, business clients, and individuals in the United States. The company provides savings and money market accounts, demand deposits, time and brokered deposits, and interest and noninterest bearing transaction, as well as certificates of deposit. It offers commercial loans to sole proprietorships, partnerships, corporations, and other business enterprises to finance working capital, capital investment, or for other business related purposes; paycheck protection program loans; construction and land development loans; 1-4 family mortgage loans; multifamily lending products; owner and non-owner occupied commercial real estate loans; and consumer and other loans. In addition, the company online, mobile, and direct banking services. Bridgewater Bancshares, Inc. was incorporated in 2005 and is headquartered in Saint Louis Park, Minnesota.

About Middlefield Banc

Middlefield Banc Corp. operates as the bank holding company for The Middlefield Banking Company that provides various commercial banking services to small and medium-sized businesses, professionals, small business owners, and retail customers in northeastern and central Ohio. It offers checking, savings, negotiable order of withdrawal accounts, money market accounts, time certificates of deposit, commercial loans, real estate loans, various consumer loans, safe deposit facilities, and travelers' checks. The company also provides operational and working capital, term business, residential construction, professional, and residential and mortgage loans, as well as consumer installment loans for home improvements, automobiles, boats, and other personal expenditures; loans to finance capital purchases; selected guaranteed or subsidized loan programs for small businesses; and agricultural loans. In addition, the company resolves and disposes troubled assets in Ohio. Further, it offers official checks, money orders, and ATM services, as well as IRA accounts; online banking and bill payment services to individuals; and online cash management services to business customers. Middlefield Banc Corp. was founded in 1901 and is headquartered in Middlefield, Ohio.