Contrasting Bank of the James Financial Group (NASDAQ:BOTJ) and Prime Meridian (OTCMKTS:PMHG)

Prime Meridian (OTCMKTS:PMHG) and Bank of the James Financial Group (NASDAQ:BOTJ) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Profitability

This table compares Prime Meridian and Bank of the James Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prime Meridian	15.55%	9.25%	0.87%
Bank of the James Financial Group	11.72%	10.45%	0.71%

Risk and Volatility

Prime Meridian has a beta of 0.17, indicating that its share price is 83% less volatile than the S&P 500. Comparatively, Bank of the James Financial Group has a beta of 0.3, indicating that its share price is 70% less volatile than the S&P 500.

Dividends

Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 1.9%. Bank of the James Financial Group pays an annual dividend of $0.40 per share and has a dividend yield of 2.6%. Prime Meridian pays out 40.3% of its earnings in the form of a dividend. Bank of the James Financial Group pays out 25.2% 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. Bank of the James Financial Group has raised its dividend for 5 consecutive years. Bank of the James Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

11.8% of Prime Meridian shares are held by institutional investors. Comparatively, 18.5% of Bank of the James Financial Group shares are held by institutional investors. 25.9% of Prime Meridian shares are held by company insiders. Comparatively, 15.4% of Bank of the James Financial Group shares are held 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 & Earnings

This table compares Prime Meridian and Bank of the James Financial Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prime Meridian	$50.36 million	3.55	$8.49 million	$2.48	21.37
Bank of the James Financial Group	$59.78 million	N/A	$7.94 million	$1.59	9.78

Prime Meridian has higher earnings, but lower revenue than Bank of the James Financial Group. Bank of the James Financial Group is trading at a lower price-to-earnings ratio than Prime Meridian, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and price targets for Prime Meridian and Bank of the James Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prime Meridian	0	0	0	0	0.00
Bank of the James Financial Group	0	1	0	0	2.00

Summary

Bank of the James Financial Group beats Prime Meridian on 8 of the 14 factors compared between the two stocks.

About Prime Meridian

Prime Meridian Holding Company operates as the bank holding company for Prime Meridian Bank that provides various consumer and commercial banking services to individuals and businesses. The company accepts various deposits, such as checking, money market, savings, term certificate of deposit, demand interest-bearing and noninterest-bearing, health savings, NOW, and escrow accounts, as well as retirement savings plans and time deposits. Its loan products include commercial real estate, residential real estate and home equity, small business administration, construction, equipment, and commercial loans; and consumer and other loans comprising financing of automobiles, boats, and recreational vehicles, as well as issues standby letters and business lines of credit. The company also offers debit and credit cards; mobile banking, remote and mobile deposit, Apple Pay, bank-to-bank transfer, and online banking services; and safe deposit, wire transfer, foreign exchange, direct deposits, notary, night depository, official checks, domestic collections, bank drafts, automated teller services, drive-in tellers, merchant card, and banking by mail services, as well as invests in securities. Prime Meridian Holding Company was founded in 2008 and is headquartered in Tallahassee, Florida.

About Bank of the James Financial Group

Bank of the James Financial Group, Inc. operates as the bank holding company for Bank of the James that provides general retail and commercial banking services to individuals, businesses, associations and organizations, and governmental authorities in Virginia, the United States. It offers checking, savings, individual retirement, and health care saving accounts, as well as other time deposits, including money market accounts and certificates of deposit. The company also provides loans to small- and medium-sized businesses for the purchases of equipment, facilities upgrades, inventory acquisition, and various working capital purposes; commercial and residential construction and development loans; commercial real estate mortgage loans; residential mortgage loans; and secured and unsecured consumer loans, such as lines of credit and overdraft lines of credit, as well as personal, automobile, installment, demand, and home equity loans for personal, family, or household purposes. In addition, it offers other banking services, including safe deposit boxes, traveler's checks, direct deposit of payroll and social security checks, automatic drafts for various accounts, treasury management, and credit card merchant services. Further, the company provides mortgage banking; investment advisory services; securities brokerage and investment services; and telephone and internet banking services comprising online bill pay, as well as acts as an agent for insurance and annuity products. The company was founded in 1999 and is headquartered in Lynchburg, Virginia.