Critical Review: Brookline Bancorp (NASDAQ:BRKL) & Magyar Bancorp (NASDAQ:MGYR)

Magyar Bancorp (NASDAQ:MGYR) and Brookline Bancorp (NASDAQ:BRKL) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, earnings, valuation, dividends, profitability, risk and analyst recommendations.

Institutional & Insider Ownership

46.3% of Magyar Bancorp shares are owned by institutional investors. Comparatively, 78.9% of Brookline Bancorp shares are owned by institutional investors. 10.5% of Magyar Bancorp shares are owned by company insiders. Comparatively, 2.9% of Brookline Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Profitability

This table compares Magyar Bancorp and Brookline Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Magyar Bancorp	15.19%	6.98%	0.81%
Brookline Bancorp	12.04%	6.51%	0.68%

Dividends

Magyar Bancorp pays an annual dividend of $0.20 per share and has a dividend yield of 1.6%. Brookline Bancorp pays an annual dividend of $0.54 per share and has a dividend yield of 5.5%. Magyar Bancorp pays out 16.7% of its earnings in the form of a dividend. Brookline Bancorp pays out 58.1% 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. Magyar Bancorp has increased its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and price targets for Magyar Bancorp and Brookline Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magyar Bancorp	0	0	0	0	N/A
Brookline Bancorp	0	1	3	0	2.75

Brookline Bancorp has a consensus target price of $11.25, suggesting a potential upside of 14.33%. Given Brookline Bancorp’s higher possible upside, analysts clearly believe Brookline Bancorp is more favorable than Magyar Bancorp.

Earnings & Valuation

This table compares Magyar Bancorp and Brookline Bancorp’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magyar Bancorp	$40.75 million	2.01	$7.71 million	$1.20	10.33
Brookline Bancorp	$609.22 million	1.44	$75.00 million	$0.93	10.58

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

Volatility and Risk

Magyar Bancorp has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500. Comparatively, Brookline Bancorp has a beta of 0.79, suggesting that its share price is 21% less volatile than the S&P 500.

About Magyar Bancorp

Magyar Bancorp, Inc. operates as the holding company for Magyar Bank that provides various consumer and commercial banking services to individuals, businesses, and nonprofit organizations in New Jersey, the United States. It accepts various deposit accounts, including demand, savings, NOW, money market, and retirement accounts, as well as certificates of deposit. The company also provides residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans, and construction loans, as well as small business administration loans. In addition, it offers non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers; and buys, sells, and holds investment securities. The company has branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. Magyar Bancorp, Inc. was founded in 1922 and is headquartered in New Brunswick, New Jersey.

About Brookline Bancorp

Brookline Bancorp, Inc. operates as a bank holding company for the Brookline Bank that provide commercial, business, and retail banking services to corporate, municipal, and retail customers in the United States. Its deposit products include demand checking, NOW, money market, and savings accounts. The company's loan portfolio primarily comprises first mortgage loans secured by commercial, multi-family, and residential real estate properties; loans to business entities comprising commercial lines of credit; loans to condominium associations; loans and leases used to finance equipment for small businesses; financing for construction and development projects; and home equity and other consumer loans. It provides credit, term loans, letters of credit, foreign exchange, cash management, consumer and residential loans, wealth and investment advisory, and online and mobile banking services, as well as invests in debt and equity securities. The company was founded in 1871 and is headquartered in Boston, Massachusetts.