Reviewing Live Oak Bancshares (LOB) & Mackinac Financial (MFNC)

Live Oak Bancshares (NASDAQ:LOB) and Mackinac Financial (NASDAQ:MFNC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, valuation, analyst recommendations, profitability, earnings, dividends and institutional ownership.

Valuation and Earnings

This table compares Live Oak Bancshares and Mackinac Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Live Oak Bancshares $266.41 million 2.33 $51.45 million $1.32 11.69
Mackinac Financial $59.64 million 2.84 $8.37 million $1.22 12.98

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

Risk and Volatility

Live Oak Bancshares has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500. Comparatively, Mackinac Financial has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Live Oak Bancshares and Mackinac Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Live Oak Bancshares 0 1 1 0 2.50
Mackinac Financial 0 0 2 0 3.00

Live Oak Bancshares currently has a consensus target price of $16.50, suggesting a potential upside of 6.93%. Mackinac Financial has a consensus target price of $19.00, suggesting a potential upside of 20.03%. Given Mackinac Financial’s stronger consensus rating and higher possible upside, analysts clearly believe Mackinac Financial is more favorable than Live Oak Bancshares.

Insider and Institutional Ownership

46.3% of Live Oak Bancshares shares are held by institutional investors. Comparatively, 45.1% of Mackinac Financial shares are held by institutional investors. 25.7% of Live Oak Bancshares shares are held by company insiders. Comparatively, 24.7% of Mackinac Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Live Oak Bancshares and Mackinac Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Live Oak Bancshares 19.31% 11.79% 1.58%
Mackinac Financial 14.03% 8.52% 0.92%

Dividends

Live Oak Bancshares pays an annual dividend of $0.12 per share and has a dividend yield of 0.8%. Mackinac Financial pays an annual dividend of $0.48 per share and has a dividend yield of 3.0%. Live Oak Bancshares pays out 9.1% of its earnings in the form of a dividend. Mackinac Financial pays out 39.3% 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. Live Oak Bancshares has increased its dividend for 3 consecutive years and Mackinac Financial has increased its dividend for 5 consecutive years. Mackinac Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Live Oak Bancshares beats Mackinac Financial on 10 of the 17 factors compared between the two stocks.

Live Oak Bancshares Company Profile

Live Oak Bancshares, Inc. operates as the bank holding company for the Live Oak Banking Company that provides various commercial banking products and services to individuals and businesses in North Carolina. The company accepts various deposit products, including noninterest-bearing demand, interest-bearing checking, money market, saving, and time deposits. It also offers commercial and industrial loans; construction and development loans; owner occupied and non-owner occupied collateral commercial real estate loans; and commercial land loans. The company was founded in 2008 and is headquartered in Wilmington, North Carolina.

Mackinac Financial Company Profile

Mackinac Financial Corporation operates as the bank holding company for mBank that provides commercial and retail banking products and services in the United States. The company accepts interest bearing and non-interest bearing accounts, such as commercial and retail checking accounts, negotiable order of withdrawal accounts, money market accounts, individual retirement accounts, regular interest-bearing statement savings accounts, certificates of deposit, time deposits, and interest bearing transaction accounts. Its loan products include provides commercial loans to entities within real estate — operators of nonresidential buildings industry; consumer loan products comprising installment, mortgages, and home equity loans, as well as residential mortgage loans; and commercial and governmental lease financing. The company also offers safe deposit facilities. As of March 27, 2018, it operated 12 branches in the Upper Peninsula; 4 branches in the Northern Lower Peninsula; 1 branch in Oakland County, Michigan; and 7 branches in northern Wisconsin. The company was formerly known as North Country Financial Corporation and changed its name to Mackinac Financial Corporation in December 2004. Mackinac Financial Corporation was incorporated in 1974 and is headquartered in Manistique, Michigan.

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