1st Constitution Bancorp (NASDAQ: FCCY) and Farmers & Merchants Bancorp, Inc. (OH) Common Stock (NASDAQ:FMAO) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

This table compares 1st Constitution Bancorp 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
1st Constitution Bancorp 14.43% 9.88% 1.04%
Farmers & Merchants Bancorp, Inc. (OH) Common Stock 26.50% 10.78% 1.31%

Dividends

1st Constitution Bancorp pays an annual dividend of $0.24 per share and has a dividend yield of 1.1%. Farmers & Merchants Bancorp, Inc. (OH) Common Stock pays an annual dividend of $0.56 per share and has a dividend yield of 1.2%. 1st Constitution Bancorp pays out 22.6% of its earnings in the form of a dividend. Farmers & Merchants Bancorp, Inc. (OH) Common Stock pays out 40.6% 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.

Earnings & Valuation

This table compares 1st Constitution Bancorp and Farmers & Merchants Bancorp, Inc. (OH) Common Stock’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
1st Constitution Bancorp $49.90 million 3.65 $6.92 million $1.06 20.57
Farmers & Merchants Bancorp, Inc. (OH) Common Stock $51.98 million 8.08 $12.72 million $1.38 32.87

Farmers & Merchants Bancorp, Inc. (OH) Common Stock has higher revenue and earnings than 1st Constitution Bancorp. 1st Constitution Bancorp 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.

Risk & Volatility

1st Constitution Bancorp has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp, Inc. (OH) Common Stock has a beta of 0.12, suggesting that its share price is 88% less volatile than the S&P 500.

Insider and Institutional Ownership

28.5% of 1st Constitution Bancorp shares are held by institutional investors. Comparatively, 14.8% of Farmers & Merchants Bancorp, Inc. (OH) Common Stock shares are held by institutional investors. 14.6% of 1st Constitution Bancorp shares are held by insiders. Comparatively, 4.5% of Farmers & Merchants Bancorp, Inc. (OH) Common Stock shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for 1st Constitution Bancorp and Farmers & Merchants Bancorp, Inc. (OH) Common Stock, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
1st Constitution Bancorp 0 1 0 0 2.00
Farmers & Merchants Bancorp, Inc. (OH) Common Stock 0 1 0 0 2.00

1st Constitution Bancorp currently has a consensus price target of $18.00, indicating a potential downside of 17.43%. Given 1st Constitution Bancorp’s higher probable upside, research analysts clearly believe 1st Constitution Bancorp is more favorable than Farmers & Merchants Bancorp, Inc. (OH) Common Stock.

Summary

Farmers & Merchants Bancorp, Inc. (OH) Common Stock beats 1st Constitution Bancorp on 9 of the 14 factors compared between the two stocks.

About 1st Constitution Bancorp

1st Constitution Bancorp operates as the bank holding company for 1st Constitution Bank that provides commercial and retail banking services in the central and northeastern New Jersey areas. The company offers deposit products, including interest bearing demand deposits, such as interest-bearing checking accounts, money market accounts, and NOW accounts; and non-interest bearing demand, savings, and time deposits, as well as certificates of deposit. It also provides commercial loans, including term loans, lines of credit, and loans secured by equipment and receivables; secured and unsecured short-to-medium term commercial loans to businesses for working capital, business expansion, and the purchase of equipment and machinery; and construction loans to real estate developers for the acquisition, development, and construction of residential and commercial properties. In addition, the company offers residential first mortgage loans secured by owner-occupied property; construction loans; reverse mortgages; second mortgage home improvement loans; home equity lines of credit; and non-residential consumer loans for automobiles, recreation vehicles, and boats, as well as secured and unsecured personal loans, and deposit account secured loans. It serves corporations, individuals, partnerships, and other community organizations, as well as small businesses and not-for-profit organizations. As of December 31, 2017, the company operated through 17 branch offices, as well as 2 residential mortgage loan production offices in New Jersey. 1st Constitution Bancorp was founded in 1989 and is based in Cranbury, New Jersey.

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

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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