National Bankshares (NASDAQ:NKSH) & Prime Meridian (OTCMKTS:PMHG) Critical Analysis

National Bankshares (NASDAQ:NKSH) and Prime Meridian (OTCMKTS:PMHG) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, dividends, valuation, profitability, risk, earnings and institutional ownership.

Insider and Institutional Ownership

29.7% of National Bankshares shares are held by institutional investors. Comparatively, 11.8% of Prime Meridian shares are held by institutional investors. 3.2% of National Bankshares shares are held by company insiders. Comparatively, 25.9% of Prime Meridian shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

National Bankshares pays an annual dividend of $1.56 per share and has a dividend yield of 4.5%. Prime Meridian pays an annual dividend of $1.00 per share and has a dividend yield of 1.8%. National Bankshares pays out 76.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Prime Meridian pays out 40.3% of its earnings in the form of a dividend.

Volatility & Risk

National Bankshares has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Prime Meridian has a beta of 0.06, meaning that its stock price is 94% less volatile than the S&P 500.

Valuation and Earnings

This table compares National Bankshares and Prime Meridian”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
National Bankshares	$79.08 million	2.76	$7.62 million	$2.04	16.82
Prime Meridian	$50.36 million	3.78	$8.49 million	$2.48	22.58

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

Profitability

This table compares National Bankshares and Prime Meridian’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
National Bankshares	15.56%	8.62%	0.80%
Prime Meridian	15.49%	9.27%	0.87%

Analyst Recommendations

This is a summary of recent recommendations and price targets for National Bankshares and Prime Meridian, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
National Bankshares	0	1	0	0	2.00
Prime Meridian	0	0	0	0	0.00

Summary

Prime Meridian beats National Bankshares on 8 of the 14 factors compared between the two stocks.

About National Bankshares

National Bankshares, Inc. operates as the bank holding company for the National Bank of Blacksburg that provides retail and commercial banking products and services to individuals, businesses, non-profits, and local governments. The company accepts interest-bearing and non-interest-bearing demand deposit accounts, money market deposit accounts, savings accounts, certificates of deposit, health savings accounts, and individual retirement accounts. Its loan products include commercial and agricultural, commercial real estate, residential real estate, home equity, and various consumer loan products, as well as loans for the construction of commercial and residential properties. The company also provides business and consumer debit and credit cards; letters of credit, night depository services, safe deposit boxes, utility payment services, and automatic funds transfer; wealth management, trust, and estate services; non-deposit investment and insurance products; and telephone, mobile, and Internet banking services. The company was founded in 1891 and is headquartered in Blacksburg, Virginia.

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.