People’s United Financial (NASDAQ: PBCT) and Farmers & Merchants Bancorp, Inc. (OH) Common Stock (NASDAQ:FMAO) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.

Analyst Ratings

This is a breakdown of recent ratings and price targets for People’s United Financial and Farmers & Merchants Bancorp, Inc. (OH) Common Stock, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
People’s United Financial 1 5 1 0 2.00
Farmers & Merchants Bancorp, Inc. (OH) Common Stock 0 1 0 0 2.00

People’s United Financial presently has a consensus target price of $19.93, indicating a potential upside of 6.06%. Given People’s United Financial’s higher possible upside, research analysts plainly believe People’s United Financial is more favorable than Farmers & Merchants Bancorp, Inc. (OH) Common Stock.

Profitability

This table compares People’s United Financial and Farmers & Merchants Bancorp, Inc. (OH) Common Stock’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
People’s United Financial 21.64% 7.16% 0.90%
Farmers & Merchants Bancorp, Inc. (OH) Common Stock 25.55% 10.24% 1.24%

Risk and Volatility

People’s United Financial has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp, Inc. (OH) Common Stock has a beta of 0.05, meaning that its share price is 95% less volatile than the S&P 500.

Dividends

People’s United Financial pays an annual dividend of $0.70 per share and has a dividend yield of 3.7%. Farmers & Merchants Bancorp, Inc. (OH) Common Stock pays an annual dividend of $0.52 per share and has a dividend yield of 1.3%. People’s United Financial pays out 67.3% of its earnings in the form of a dividend. Farmers & Merchants Bancorp, Inc. (OH) Common Stock pays out 37.7% 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. People’s United Financial has increased its dividend for 11 consecutive years. People’s United Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional & Insider Ownership

77.1% of People’s United Financial shares are owned by institutional investors. Comparatively, 14.9% of Farmers & Merchants Bancorp, Inc. (OH) Common Stock shares are owned by institutional investors. 2.5% of People’s United Financial shares are owned by company insiders. Comparatively, 4.5% of Farmers & Merchants Bancorp, Inc. (OH) Common Stock shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares People’s United Financial and Farmers & Merchants Bancorp, Inc. (OH) Common Stock’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
People’s United Financial $1.66 billion 3.95 $337.20 million $1.04 18.07
Farmers & Merchants Bancorp, Inc. (OH) Common Stock $51.98 million 7.37 $12.72 million $1.38 29.93

People’s United Financial has higher revenue and earnings than Farmers & Merchants Bancorp, Inc. (OH) Common Stock. People’s United Financial is trading at a lower price-to-earnings ratio than Farmers & Merchants Bancorp, Inc. (OH) Common Stock, indicating that it is currently the more affordable of the two stocks.

People’s United Financial Company Profile

People's United Financial, Inc. operates as the bank holding company for People's United Bank, National Association that provides commercial banking, retail banking, and wealth management services to individual, corporate, and municipal customers. The company operates in two segments, Commercial Banking and Retail Banking. The Commercial Banking segment offers commercial real estate lending, commercial and industrial lending, and commercial deposit gathering services. This segment also provides equipment financing; cash management, correspondent banking, and municipal banking services; and institutional trust, corporate trust, private banking, and insurance services. The Retail Banking segment offers consumer lending, including residential mortgage and home equity lending; and consumer deposit gathering services. This segment also provides brokerage, financial advisory, investment management, life insurance, and non-institutional trust services. In addition, the company offers online banking, investment trading, and telephone banking services. It operates through a network of 403 branches, including 147 full-service stop and shop supermarket branches located in Connecticut, southeastern New York, Massachusetts, Vermont, Maine, and New Hampshire, as well as 598 ATMs. People's United Financial, Inc. was founded in 1842 and is headquartered in Bridgeport, Connecticut.

Farmers & Merchants Bancorp, Inc. (OH) Common Stock Company Profile

Farmers & Merchants Bancorp, Inc. operates as the bank holding company for The Farmers & Merchants State Bank that provides commercial banking, retail banking, and other financial products and services to individuals and small businesses in northwest Ohio and northeast Indiana. The company offers checking accounts; savings and time deposits, including certificates of deposits; and custodial services for individual retirement accounts and health savings accounts. It also provides commercial, agricultural, and residential mortgage, as well as consumer and credit card lending products; loans for farm land, farm equipment, and livestock; operating loans for seeds, fertilizers, and feeds; home improvements loans; and loans for autos, trucks, recreational vehicles, and motorcycles. In addition, the company offers commercial real estate loans, such as operation lines of credit and machinery purchase loans; and agricultural and consumer real estate, commercial and industrial, agricultural, and consumer loans, as well as industrial development bonds. Further, it provides automated teller machine services; and online banking, remote deposit capture or electronic deposit processing, merchant credit card, and mobile banking services. As of February 8, 2018, the company operated through 25 offices. Farmers & Merchants Bancorp, Inc. was founded in 1897 and is based in Archbold, Ohio.

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