Comparing Hanover Bancorp (NASDAQ:HNVR) and QNB (OTCMKTS:QNBC)

Hanover Bancorp (NASDAQ:HNVR) and QNB (OTCMKTS:QNBC) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, institutional ownership, profitability, valuation, analyst recommendations, risk and dividends.

Insider & Institutional Ownership

15.0% of Hanover Bancorp shares are held by institutional investors. Comparatively, 0.7% of QNB shares are held by institutional investors. 24.8% of Hanover Bancorp shares are held by insiders. Comparatively, 16.0% of QNB shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Hanover Bancorp and QNB’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hanover Bancorp	$113.89 million	1.08	$15.16 million	$1.96	8.62
QNB	$73.92 million	1.16	$9.48 million	$2.19	10.64

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

Dividends

Hanover Bancorp pays an annual dividend of $0.40 per share and has a dividend yield of 2.4%. QNB pays an annual dividend of $1.48 per share and has a dividend yield of 6.4%. Hanover Bancorp pays out 20.4% of its earnings in the form of a dividend. QNB pays out 67.6% 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.

Analyst Recommendations

This is a breakdown of recent ratings for Hanover Bancorp and QNB, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hanover Bancorp	0	0	1	0	3.00
QNB	0	0	0	0	N/A

Hanover Bancorp currently has a consensus target price of $21.00, suggesting a potential upside of 24.26%. Given Hanover Bancorp’s higher probable upside, equities analysts clearly believe Hanover Bancorp is more favorable than QNB.

Profitability

This table compares Hanover Bancorp and QNB’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hanover Bancorp	10.82%	7.62%	0.64%
QNB	10.12%	9.38%	0.47%

Volatility and Risk

Hanover Bancorp has a beta of -0.23, indicating that its share price is 123% less volatile than the S&P 500. Comparatively, QNB has a beta of 0.51, indicating that its share price is 49% less volatile than the S&P 500.

Summary

Hanover Bancorp beats QNB on 9 of the 15 factors compared between the two stocks.

About Hanover Bancorp

Hanover Bancorp, Inc., a bank holding company for Hanover Community Bank, provides personal and business lending and deposit services to businesses, municipalities, and individuals in the New York metro area. The company offers checking, credit cards, debit cards, money market, savings, government and municipal banking, and professional services, as well as time deposits, including certificate of deposit and individual retirement accounts. It also provides business loans, commercial real estate financing, small business administration, lending directory services, and residential mortgage. In addition, the company offers cash management, online and mobile banking, merchant services, and digital solutions. Its banking offices are located in Nassau, Suffolk, Queens, Kings, New York Counties, New York, Monmouth County, Freehold, and New Jersey. The company was founded in 2008 and is headquartered in Mineola, New York.

About QNB

QNB Corp. operates as the bank holding company for QNB Bank that engages in the provision of commercial and retail banking products, and retail brokerage services. It offers various deposit products, which include demand and savings accounts, such as money market, interest-bearing demand, club, traditional statement savings, and online savings accounts; and time deposits comprising certificates of deposit and individual retirement accounts. The company also provides commercial and industrial loans, commercial and residential real estate loans, construction and land development loans, indirect lease financing, 1-4 family residential mortgage loans, home equity loans and lines of credit, and consumer loans. In addition, it offers retail brokerage and advisory services; credit cards and insurance products; merchant services; ATM and debit card services; and internet and mobile-banking, electronic bill pay, and remote deposit capture services. The company serves other community banks, thrift institutions, credit unions and other non-bank financial organizations, such as mutual fund companies, insurance companies, and brokerage companies. QNB Corp. was founded in 1877 and is based in Quakertown, Pennsylvania.