Meridian (NASDAQ:MRBK) and Park National (NYSE:PRK) Critical Review

Park National (NYSE:PRK) and Meridian (NASDAQ:MRBK) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Dividends

Park National pays an annual dividend of $4.24 per share and has a dividend yield of 2.2%. Meridian pays an annual dividend of $0.50 per share and has a dividend yield of 3.5%. Park National pays out 50.2% of its earnings in the form of a dividend. Meridian pays out 49.5% 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. Meridian is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Park National	22.09%	12.05%	1.44%
Meridian	6.00%	6.99%	0.49%

Analyst Ratings

This is a summary of current recommendations and price targets for Park National and Meridian, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Park National	0	2	0	0	2.00
Meridian	0	1	1	0	2.50

Park National currently has a consensus target price of $130.00, indicating a potential downside of 33.06%. Meridian has a consensus target price of $16.00, indicating a potential upside of 10.50%. Given Meridian’s stronger consensus rating and higher probable upside, analysts clearly believe Meridian is more favorable than Park National.

Volatility & Risk

Park National has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Meridian has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.

Institutional & Insider Ownership

62.7% of Park National shares are owned by institutional investors. Comparatively, 58.6% of Meridian shares are owned by institutional investors. 2.7% of Park National shares are owned by insiders. Comparatively, 14.0% of Meridian shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Park National and Meridian”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Park National	$564.30 million	5.56	$126.73 million	$8.45	22.98
Meridian	$104.81 million	1.55	$13.24 million	$1.01	14.34

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

Summary

Park National beats Meridian on 9 of the 16 factors compared between the two stocks.

About Park National

Park National Corporation operates as the bank holding company for Park National Bank that provides commercial banking and trust services in small and medium population areas. The company offers deposits for demand, savings, and time accounts; trust and wealth management services; cash management services; safe deposit operations; electronic funds transfers; Internet and mobile banking solutions with bill pay service; credit cards; and various additional banking-related services. It also provides commercial loans, including financing for industrial and commercial properties, financing for equipment, inventory and accounts receivable, acquisition financing, and commercial leasing, as well as for consumer finance companies; commercial real estate loans comprising mortgage loans to developers and owners of commercial real estate; originates financing leases primarily for the purchase of commercial vehicles, operating/manufacturing equipment, and municipal vehicles/equipment; consumer loans, such as automobile loans; consumer finance services; home equity lines of credit; and residential real estate and construction loans, as well as installment loans and commercial loans. In addition, the company offers aircraft financing services; and ParkDirect, a personal banking application. Park National Corporation was founded in 1908 and is headquartered in Newark, Ohio.

About Meridian

Meridian Corporation operates as the holding company for Meridian Bank that provides commercial banking products and services in Pennsylvania, New Jersey, Delaware, Florida, and Maryland. The company offers various deposit products, such as demand non-interest bearing, demand interest bearing, savings accounts, money market accounts, and time deposits. It also provides commercial and industrial loans comprising business lines of credit, term loans, small business lending, lease financing, shared national credits, and other financing; commercial real estate, and land development and construction loans for residential and commercial projects; and consumer and home equity lending, private banking, merchant, and title and land settlement services. In addition, the company operates and originates mortgage loans for 1-4 family dwellings; and offers real estate holding, investment advisory, and equipment leasing services, as well as financial planning and wealth management services. Meridian Corporation was incorporated in 2004 and is headquartered in Malvern, Pennsylvania.