Texas Capital Bancshares (NASDAQ:TCBI – Get Free Report) and Farmers & Merchants Bancorp (OTCMKTS:FMCB – Get Free Report) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, earnings, institutional ownership, dividends, valuation and risk.
Institutional and Insider Ownership
96.9% of Texas Capital Bancshares shares are owned by institutional investors. Comparatively, 5.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. 1.7% of Texas Capital Bancshares shares are owned by insiders. Comparatively, 8.0% of Farmers & Merchants Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Texas Capital Bancshares and Farmers & Merchants Bancorp”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Texas Capital Bancshares | $1.26 billion | 3.40 | $330.24 million | $6.80 | 14.23 |
| Farmers & Merchants Bancorp | $303.12 million | 2.79 | $93.61 million | $134.01 | 8.95 |
Texas Capital Bancshares has higher revenue and earnings than Farmers & Merchants Bancorp. Farmers & Merchants Bancorp is trading at a lower price-to-earnings ratio than Texas Capital Bancshares, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent ratings and price targets for Texas Capital Bancshares and Farmers & Merchants Bancorp, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Texas Capital Bancshares | 3 | 6 | 4 | 1 | 2.21 |
| Farmers & Merchants Bancorp | 0 | 0 | 0 | 0 | 0.00 |
Texas Capital Bancshares presently has a consensus target price of $101.17, suggesting a potential upside of 4.57%. Given Texas Capital Bancshares’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Texas Capital Bancshares is more favorable than Farmers & Merchants Bancorp.
Volatility and Risk
Texas Capital Bancshares has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.18, suggesting that its share price is 82% less volatile than the S&P 500.
Profitability
This table compares Texas Capital Bancshares and Farmers & Merchants Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Texas Capital Bancshares | 16.52% | 10.05% | 1.03% |
| Farmers & Merchants Bancorp | 30.88% | 15.05% | 1.67% |
Summary
Texas Capital Bancshares beats Farmers & Merchants Bancorp on 10 of the 15 factors compared between the two stocks.
About Texas Capital Bancshares
Texas Capital Bancshares, Inc. operates as the bank holding company for Texas Capital Bank, is a full-service financial services firm that delivers customized solutions to businesses, entrepreneurs, and individual customers. The company offers commercial banking; consumer banking; investment banking solutions, including capital markets, mergers and acquisitions, and syndicated finance, as well as financial sponsor coverage, capital solutions, and institutional services; and wealth management services, such as investment management, financial planning, lockbox and insurance, securities-based lending, estate planning, and business succession, as well as philanthropic, trustee and executor, custom credit, and depository services. It also provides deposit accounts, analyzed accounts, commercial card, SBA and business loans, packaged solutions, and merchant services; liquidity and investments, working capital, international trade and payment, and treasury and credit products; and commercial real estate, homebuilder and community, and mortgage finance. In addition, the company offers payables and receivables management; online and mobile banking; term loans and lines of credit, equipment finance and lease, acquisition finance, and asset-based lending; private wealth advisory solutions; and checking and savings accounts, debit and credit cards, and certificates of deposit, as well as ETF and funds management services. Further, it provides financial institution money market accounts and loan syndication products; commercial loans for financing for working capital, organic growth, and acquisitions; real estate term and construction loans; mortgage warehouse lending services; treasury management, trust, and advisory and escrow services; and letters of credit. The company operates in Austin, Dallas, Fort Worth, Houston, and San Antonio metropolitan areas of Texas. Texas Capital Bancshares, Inc. was incorporated in 1996 and is headquartered in Dallas, Texas.
About Farmers & Merchants Bancorp
Farmers & Merchants Bancorp operates as the bank holding company for Farmers & Merchants Bank of Central California that provides various banking services to businesses and individuals. The company accepts various deposit products, including checking, savings, money market, time certificates of deposit, and individual retirement accounts. It also offers range of lending products comprising commercial and residential real estate, real estate construction, agribusiness, and consumer loans, as well as equipment leases and credit card services; commercial products, including term loans, lines of credit and other working capital financing, and letters of credit; and financing products, such as automobile financing, home improvement, and home equity lines of credit. In addition, the company provides various specialized services consisting of credit card programs for merchants, lockbox and other collection services, account reconciliation, investment sweep, online account access, and electronic funds transfers through domestic and international wire and automated clearinghouse; online banking services; and investment products, such as mutual funds and annuities. The company was founded in 1916 and is headquartered in Lodi, California.
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