Merchants Bancorp (NASDAQ:MBIN) & Byline Bancorp (NYSE:BY) Head to Head Review

Byline Bancorp (NYSE:BY) and Merchants Bancorp (NASDAQ:MBIN) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Byline Bancorp and Merchants Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Byline Bancorp	0	2	3	0	2.60
Merchants Bancorp	1	2	2	0	2.20

Byline Bancorp currently has a consensus target price of $33.25, indicating a potential upside of 10.04%. Merchants Bancorp has a consensus target price of $40.25, indicating a potential upside of 13.00%. Given Merchants Bancorp’s higher possible upside, analysts plainly believe Merchants Bancorp is more favorable than Byline Bancorp.

Volatility & Risk

Byline Bancorp has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Merchants Bancorp has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500.

Profitability

This table compares Byline Bancorp and Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Byline Bancorp	20.01%	11.26%	1.36%
Merchants Bancorp	17.73%	15.20%	1.30%

Insider and Institutional Ownership

67.7% of Byline Bancorp shares are owned by institutional investors. Comparatively, 24.6% of Merchants Bancorp shares are owned by institutional investors. 28.8% of Byline Bancorp shares are owned by insiders. Comparatively, 34.8% of Merchants Bancorp shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Dividends

Byline Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.3%. Merchants Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 1.1%. Byline Bancorp pays out 14.2% of its earnings in the form of a dividend. Merchants Bancorp pays out 9.2% 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. Byline Bancorp has increased its dividend for 1 consecutive years and Merchants Bancorp has increased its dividend for 8 consecutive years.

Earnings & Valuation

This table compares Byline Bancorp and Merchants Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Byline Bancorp	$624.78 million	2.22	$120.76 million	$2.81	10.75
Merchants Bancorp	$1.45 billion	1.13	$320.39 million	$4.35	8.19

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

Summary

Merchants Bancorp beats Byline Bancorp on 9 of the 17 factors compared between the two stocks.

About Byline Bancorp

Byline Bancorp, Inc. operates as the bank holding company for Byline Bank that provides various banking products and services for small and medium sized businesses, commercial real estate and financial sponsors, and consumers in the United States. It offers various retail deposit products, including non-interest-bearing accounts, money market demand accounts, savings accounts, interest-bearing checking accounts, and time deposits; ATM and debit cards; and online, mobile, and text banking services, as well as commercial deposits. The company also provides term loans, revolving lines of credit, and construction financing services; senior secured financing solutions to private equity backed lower middle market companies; small business administration and united states department of agriculture loans; and treasury management products and services. In addition, it offers financing solutions for equipment vendors and their end users; syndication services; and investment, trust, and wealth management services that include fiduciary and executor services, financial planning solutions, investment advisory services, and private banking services for foundations and endowments, and high net worth individuals. The company was formerly known as Metropolitan Bank Group, Inc. and changed its name to Byline Bancorp, Inc. in 2015. Byline Bancorp, Inc. was founded in 1914 and is headquartered in Chicago, Illinois.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.