Critical Analysis: Northeast Bancorp (NASDAQ:NBN) vs. Southern Banc (OTCMKTS:SRNN)

Southern Banc (OTCMKTS:SRNN) and Northeast Bancorp (NASDAQ:NBN) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Southern Banc and Northeast Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern Banc	0	0	0	0	0.00
Northeast Bancorp	0	1	1	0	2.50

Northeast Bancorp has a consensus target price of $102.00, indicating a potential downside of 12.54%. Given Northeast Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Northeast Bancorp is more favorable than Southern Banc.

Valuation & Earnings

This table compares Southern Banc and Northeast Bancorp”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern Banc	$12.13 million	0.77	$920,000.00	$1.22	9.39
Northeast Bancorp	$351.00 million	2.73	$83.44 million	$10.37	11.25

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

Volatility & Risk

Southern Banc has a beta of -0.09, meaning that its stock price is 109% less volatile than the S&P 500. Comparatively, Northeast Bancorp has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.

Profitability

This table compares Southern Banc and Northeast Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern Banc	7.47%	5.56%	0.74%
Northeast Bancorp	24.16%	17.73%	2.06%

Summary

Northeast Bancorp beats Southern Banc on 12 of the 12 factors compared between the two stocks.

About Southern Banc

The Southern Banc Company, Inc. operates as the holding company for The Southern Bank company that provides various banking products and services in Alabama. The company’s personal banking products include checking accounts, home mortgage loans, home equity loans, auto loans, and personal loans. Its business banking products comprise business checking accounts, cash flow management, real estate lending, and equipment financing. The Southern Banc Company, Inc. was founded in 1936 and is based in Gadsden, Alabama.

About Northeast Bancorp

Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.