Financial Analysis: MainStreet Bancshares (NASDAQ:MNSB) vs. Enterprise Bancorp (NASDAQ:EBTC)

Enterprise Bancorp (NASDAQ:EBTC) and MainStreet Bancshares (NASDAQ:MNSB) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, valuation, earnings, institutional ownership, risk, analyst recommendations and profitability.

Profitability

This table compares Enterprise Bancorp and MainStreet Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Enterprise Bancorp	14.99%	11.11%	0.79%
MainStreet Bancshares	12.99%	9.06%	0.85%

Valuation and Earnings

This table compares Enterprise Bancorp and MainStreet Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Enterprise Bancorp	$167.53 million	2.25	$38.06 million	$2.91	10.45
MainStreet Bancshares	$69.83 million	1.83	$26.58 million	$2.59	6.49

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

Volatility & Risk

Enterprise Bancorp has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, MainStreet Bancshares has a beta of 0.57, indicating that its stock price is 43% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Enterprise Bancorp and MainStreet Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Enterprise Bancorp	0	0	0	0	N/A
MainStreet Bancshares	0	0	0	0	N/A

Dividends

Enterprise Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 3.2%. MainStreet Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. Enterprise Bancorp pays out 33.0% of its earnings in the form of a dividend. MainStreet Bancshares pays out 15.4% 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. Enterprise Bancorp has increased its dividend for 6 consecutive years. Enterprise Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

38.9% of Enterprise Bancorp shares are held by institutional investors. Comparatively, 52.3% of MainStreet Bancshares shares are held by institutional investors. 21.7% of Enterprise Bancorp shares are held by insiders. Comparatively, 9.2% of MainStreet Bancshares shares are held by 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.

Summary

Enterprise Bancorp beats MainStreet Bancshares on 10 of the 14 factors compared between the two stocks.

About Enterprise Bancorp

Enterprise Bancorp, Inc. operates as the holding company for Enterprise Bank and Trust Company that engages in the provision of commercial banking products and services. It offers commercial and retail deposit products, including checking accounts, limited-transactional savings and money market accounts, commercial sweep products, and term certificates of deposit. The company also provides commercial real estate, commercial and industrial, commercial construction, residential, and consumer loans, as well as home equity loans and lines of credit. In addition, the company offers cash management services; wealth advisory and management services that include customized investment management and trust services to individuals, family groups, commercial businesses, trusts, foundations, non-profit organizations, and endowments; brokerage and management services to individual investors; insurance services; and online and mobile banking services. The company was founded in 1989 and is headquartered in Lowell, Massachusetts.

About MainStreet Bancshares

MainStreet Bancshares, Inc. operates as the bank holding company for MainStreet Bank that provides various banking products and services for individuals, small to medium-sized businesses, and professional service organizations. The company offers demand, NOW, money market, savings, and sweep accounts, as well as certificates of deposit; business and consumer checking, interest-bearing checking, business account analysis, and other depository services; and cash management, wire transfer, check imaging, bill pay, remote deposit capture, and courier services. It also provides commercial loans, include government contract receivables, plant and equipment, general working capital, contract administration, and acquisition loans; commercial real estate, real estate construction, and residential real estate loans; and consumer loans comprising term loans and overdraft protection, as well as debit and credit cards. In addition, the company offers deposit insurance solutions; remote deposit of checks; and internet bill payment, online cash management, and online and mobile banking services. It operates in Herndon, Fairfax, McLean, Leesburg, Clarendon, and Washington D.C., as well as automated teller machines. The company was incorporated in 2003 and is headquartered in Fairfax, Virginia.