Financial Contrast: Bank of Hawaii (NYSE:BOH) and Farmers & Merchants Bancorp (NASDAQ:FMAO)

Farmers & Merchants Bancorp (NASDAQ:FMAO) and Bank of Hawaii (NYSE:BOH) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, profitability, dividends, institutional ownership, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Farmers & Merchants Bancorp and Bank of Hawaii, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	2	1	1	2.75
Bank of Hawaii	0	6	2	0	2.25

Farmers & Merchants Bancorp presently has a consensus target price of $32.25, indicating a potential downside of 8.72%. Bank of Hawaii has a consensus target price of $85.00, indicating a potential upside of 6.26%. Given Bank of Hawaii’s higher possible upside, analysts clearly believe Bank of Hawaii is more favorable than Farmers & Merchants Bancorp.

Valuation and Earnings

This table compares Farmers & Merchants Bancorp and Bank of Hawaii”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	$190.68 million	2.55	$33.31 million	$2.91	12.14
Bank of Hawaii	$1.07 billion	2.96	$205.90 million	$5.36	14.92

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

Insider & Institutional Ownership

24.0% of Farmers & Merchants Bancorp shares are held by institutional investors. Comparatively, 82.2% of Bank of Hawaii shares are held by institutional investors. 7.3% of Farmers & Merchants Bancorp shares are held by insiders. Comparatively, 2.0% of Bank of Hawaii shares are held 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.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 2.6%. Bank of Hawaii pays an annual dividend of $2.80 per share and has a dividend yield of 3.5%. Farmers & Merchants Bancorp pays out 31.6% of its earnings in the form of a dividend. Bank of Hawaii pays out 52.2% 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. Farmers & Merchants Bancorp has raised its dividend for 19 consecutive years and Bank of Hawaii has raised its dividend for 1 consecutive years.

Profitability

This table compares Farmers & Merchants Bancorp and Bank of Hawaii’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	20.27%	10.72%	1.16%
Bank of Hawaii	21.84%	15.72%	0.98%

Risk and Volatility

Farmers & Merchants Bancorp has a beta of 0.8, meaning that its share price is 20% less volatile than the S&P 500. Comparatively, Bank of Hawaii has a beta of 0.71, meaning that its share price is 29% less volatile than the S&P 500.

Summary

Bank of Hawaii beats Farmers & Merchants Bancorp on 11 of the 18 factors compared between the two stocks.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp, Inc. is a bank holding company, which engages in the provision of commercial banking, retail banking, and financial services. It includes commercial, agricultural, and residential mortgages as well as consumer and credit card lending activities. The firm also offers checking account services, and savings and time deposit services. The company was founded in 1985 and is headquartered in Archbold, OH.

About Bank of Hawaii

Bank of Hawaii Corporation operates as the bank holding company for Bank of Hawaii that provides various financial products and services in Hawaii, Guam, and other Pacific Islands. It operates in three segments: Consumer Banking, Commercial Banking, and Treasury and Other. The Consumer Banking segment offers checking, savings, and time deposit accounts; residential mortgage loans, home equity lines of credit, automobile loans and leases, overdraft lines of credit, installment loans, small business loans and leases, and credit cards; private and international client banking, investment, credit, and trust services to individuals and families, as well as high-net-worth individuals; investment management; institutional investment advisory services to corporations, government entities, and foundations; and brokerage offerings, including equities, mutual funds, life insurance, and annuity products. The Commercial Banking segment provides corporate banking, commercial real estate loans, commercial lease financing, auto dealer financing, and deposit products. This segment also offers commercial lending and deposit products to middle-market and large companies, and government entities; commercial real estate mortgages to investors, developers, and builders; and international banking and merchant services. The Treasury and Other segment provides corporate asset and liability management services, including interest rate risk management and foreign exchange services. Bank of Hawaii Corporation was founded in 1897 and is headquartered in Honolulu, Hawaii.