Contrasting OceanFirst Financial (NASDAQ:OCFC) and Northeast Bancorp (NASDAQ:NBN)

Northeast Bancorp (NASDAQ:NBN) and OceanFirst Financial (NASDAQ:OCFC) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, risk, analyst recommendations, dividends, valuation and profitability.

Earnings & Valuation

This table compares Northeast Bancorp and OceanFirst Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Bancorp	$351.00 million	2.39	$83.44 million	$10.08	10.14
OceanFirst Financial	$692.36 million	1.42	$100.07 million	$1.41	12.17

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

Volatility & Risk

Northeast Bancorp has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500. Comparatively, OceanFirst Financial has a beta of 1.04, suggesting that its stock price is 4% more volatile than the S&P 500.

Insider & Institutional Ownership

71.0% of OceanFirst Financial shares are held by institutional investors. 14.2% of Northeast Bancorp shares are held by insiders. Comparatively, 5.0% of OceanFirst Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northeast Bancorp	23.77%	19.19%	2.04%
OceanFirst Financial	12.89%	5.22%	0.66%

Analyst Ratings

This is a breakdown of current ratings and price targets for Northeast Bancorp and OceanFirst Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Bancorp	0	1	1	0	2.50
OceanFirst Financial	0	4	1	1	2.50

Northeast Bancorp presently has a consensus target price of $97.50, indicating a potential downside of 4.58%. OceanFirst Financial has a consensus target price of $20.6667, indicating a potential upside of 20.44%. Given OceanFirst Financial’s higher possible upside, analysts plainly believe OceanFirst Financial is more favorable than Northeast Bancorp.

Dividends

Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. OceanFirst Financial pays an annual dividend of $0.80 per share and has a dividend yield of 4.7%. Northeast Bancorp pays out 0.4% of its earnings in the form of a dividend. OceanFirst Financial pays out 56.7% 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.

Summary

OceanFirst Financial beats Northeast Bancorp on 8 of the 15 factors compared between the two stocks.

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.

About OceanFirst Financial

OceanFirst Financial Corp. operates as the bank holding company for OceanFirst Bank N.A. that provides community banking services to retail and commercial customers. It accepts money market accounts, savings accounts, interest-bearing checking accounts, non-interest-bearing accounts, and time deposits, that includes brokered deposits to retail, government, and business customers. The company also offers commercial real estate, multi-family, land loans, construction, and commercial and industrial loans; fixed-rate and adjustable-rate mortgage loans that are secured by one-to-four family residences; and consumer loans, such as home equity loans and lines of credit, student loans, overdraft line of credit, loans on savings accounts, and other consumer loans. In addition, it invests in mortgage-backed securities, securities issued by the U.S. Government and agencies, corporate securities, and other investments. Further, the company offers bankcard, trust and asset management services; and bank owned life insurance products. The company was founded in 1902 and is based in Red Bank, New Jersey.