Analyzing Farmers & Merchants Bancorp (FMAO) and Blue Hills Bancorp (BHBK)

Farmers & Merchants Bancorp (NASDAQ: FMAO) and Blue Hills Bancorp (NASDAQ:BHBK) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, analyst recommendations, earnings, profitability, institutional ownership, dividends and valuation.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 1.3%. Blue Hills Bancorp pays an annual dividend of $0.60 per share and has a dividend yield of 2.9%. Farmers & Merchants Bancorp pays out 38.5% of its earnings in the form of a dividend. Blue Hills Bancorp pays out 75.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Risk and Volatility

Farmers & Merchants Bancorp has a beta of 0.08, meaning that its stock price is 92% less volatile than the S&P 500. Comparatively, Blue Hills Bancorp has a beta of 0.27, meaning that its stock price is 73% less volatile than the S&P 500.

Profitability

This table compares Farmers & Merchants Bancorp and Blue Hills Bancorp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Farmers & Merchants Bancorp 24.46% 9.65% 1.17%
Blue Hills Bancorp 19.33% 3.50% 0.55%

Analyst Ratings

This is a summary of current ratings and recommmendations for Farmers & Merchants Bancorp and Blue Hills Bancorp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Farmers & Merchants Bancorp 0 1 0 0 2.00
Blue Hills Bancorp 0 2 0 0 2.00

Blue Hills Bancorp has a consensus price target of $21.75, indicating a potential upside of 6.10%. Given Blue Hills Bancorp’s higher possible upside, analysts plainly believe Blue Hills Bancorp is more favorable than Farmers & Merchants Bancorp.

Insider & Institutional Ownership

13.6% of Farmers & Merchants Bancorp shares are held by institutional investors. Comparatively, 51.9% of Blue Hills Bancorp shares are held by institutional investors. 5.0% of Farmers & Merchants Bancorp shares are held by company insiders. Comparatively, 3.7% of Blue Hills Bancorp shares are held by company 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.

Earnings and Valuation

This table compares Farmers & Merchants Bancorp and Blue Hills Bancorp’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Farmers & Merchants Bancorp $49.10 million 7.46 $11.66 million $1.35 29.27
Blue Hills Bancorp $81.67 million 6.73 $8.65 million $0.79 25.95

Farmers & Merchants Bancorp has higher earnings, but lower revenue than Blue Hills Bancorp. Blue Hills Bancorp is trading at a lower price-to-earnings ratio than Farmers & Merchants Bancorp, indicating that it is currently the more affordable of the two stocks.

Summary

Farmers & Merchants Bancorp beats Blue Hills Bancorp on 9 of the 14 factors compared between the two stocks.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp, Inc. is a bank holding company. The Company’s primary subsidiary, The Farmers & Merchants State Bank (the Bank), is a community bank operating in Northwest Ohio and Northeast Indiana. The Company’s other subsidiary, Farmers & Merchants Risk Management (Captive), is a captive insurance company. The Bank is engaged in general commercial banking business. The Bank’s activities include commercial, agricultural and residential mortgage as well as consumer and credit card lending activities. The Bank’s loan portfolio consists of loans made to customers in the farming industry for such things as farm land, farm equipment, livestock and operating loans for seed, fertilizer and feed. Its other types of lending activities include loans for home improvements and loans for such items as autos, trucks, recreational vehicles and motorcycles. The Bank also provides checking account services, as well as savings and time deposit services, such as certificates of deposits.

About Blue Hills Bancorp

Blue Hills Bancorp, Inc. is a bank holding company for the Blue Hills Bank (the Bank). Blue Hills Bank is a Massachusetts-chartered savings bank. As of December 31, 2016, the Bank provided financial services to individuals, families, small to mid-size businesses and government and non-profit organizations online and through its 11 full-service branch offices located in Brookline, Dedham, Hyde Park, Milton, Nantucket, Norwood, West Roxbury, and Westwood, Massachusetts. Its primary deposit-taking market includes Norfolk, Suffolk and Nantucket Counties in Massachusetts, and its lending market is primarily based in eastern Massachusetts. Its business consists primarily of accepting deposits from the general public, commercial businesses and government and non-profit organizations, and investing those deposits, together with funds generated from operations and borrowings in one- to four-family residential mortgage loans, commercial business loans and investment securities, among others.

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