Analyzing Northern Trust (NASDAQ:NTRS) and MainStreet Bancshares (NASDAQ:MNSB)

MainStreet Bancshares (NASDAQ:MNSB) and Northern Trust (NASDAQ:NTRS) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, analyst recommendations, earnings, valuation, dividends and institutional ownership.

Analyst Recommendations

This is a summary of current ratings and target prices for MainStreet Bancshares and Northern Trust, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MainStreet Bancshares	0	0	0	0	N/A
Northern Trust	2	7	3	0	2.08

Northern Trust has a consensus target price of $89.58, suggesting a potential downside of 2.11%. Given Northern Trust’s higher possible upside, analysts plainly believe Northern Trust is more favorable than MainStreet Bancshares.

Valuation & Earnings

This table compares MainStreet Bancshares and Northern Trust”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MainStreet Bancshares	$69.83 million	2.05	$26.58 million	$2.59	7.26
Northern Trust	$7.63 billion	2.45	$1.11 billion	$4.53	20.20

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

Dividends

MainStreet Bancshares pays an annual dividend of $0.40 per share and has a dividend yield of 2.1%. Northern Trust pays an annual dividend of $3.00 per share and has a dividend yield of 3.3%. MainStreet Bancshares pays out 15.4% of its earnings in the form of a dividend. Northern Trust pays out 66.2% 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.

Volatility and Risk

MainStreet Bancshares has a beta of 0.56, suggesting that its stock price is 44% less volatile than the S&P 500. Comparatively, Northern Trust has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares MainStreet Bancshares and Northern Trust’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MainStreet Bancshares	12.99%	9.00%	0.85%
Northern Trust	10.53%	12.24%	0.90%

Insider and Institutional Ownership

52.3% of MainStreet Bancshares shares are held by institutional investors. Comparatively, 83.2% of Northern Trust shares are held by institutional investors. 9.2% of MainStreet Bancshares shares are held by insiders. Comparatively, 0.6% of Northern Trust shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Northern Trust beats MainStreet Bancshares on 12 of the 15 factors compared between the two stocks.

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.

About Northern Trust

Northern Trust Corporation, a financial holding company, provides wealth management, asset servicing, asset management, and banking solutions for corporations, institutions, families, and individuals worldwide. It operates in two segments, Asset Servicing and Wealth Management. The Asset Servicing segment offers asset servicing and related services, including custody, fund administration, investment operations outsourcing, investment management, investment risk and analytical services, employee benefit services, securities lending, foreign exchange, treasury management, brokerage services, transition management services, banking, and cash management services. This segment serves corporate and public retirement funds, foundations, endowments, fund managers, insurance companies, sovereign wealth funds, and other institutional investors. The Wealth Management segment offers trust, investment management, custody, and philanthropic; financial consulting; guardianship and estate administration; family business consulting; family financial education; brokerage services; and private and business banking services. This segment serves high-net-worth individuals and families, business owners, executives, professionals, retirees, and established privately held businesses. The company also provides asset management services, such as active and passive equity; active and passive fixed income; cash management; muti-asset and alternative asset classes comprising private equity and hedge funds of funds; and multi-manager advisory services and products through separately managed accounts, bank common and collective funds, registered investment companies, exchange traded funds, non-U.S. collective investment funds, and unregistered private investment funds. In addition, it offers overlay and other risk management services. Northern Trust Corporation was founded in 1889 and is headquartered in Chicago, Illinois.