Farmers & Merchants Bancorp (NASDAQ:FMAO – Get Free Report) and Lakeland Financial (NASDAQ:LKFN – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, valuation, profitability, dividends, risk and earnings.
Valuation and Earnings
This table compares Farmers & Merchants Bancorp and Lakeland Financial”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Farmers & Merchants Bancorp | $126.48 million | 3.86 | $33.31 million | $2.91 | 12.19 |
| Lakeland Financial | $421.71 million | 3.44 | $103.36 million | $4.36 | 13.37 |
Risk & Volatility
Farmers & Merchants Bancorp has a beta of 0.81, meaning that its stock price is 19% less volatile than the S&P 500. Comparatively, Lakeland Financial has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.
Insider & Institutional Ownership
24.0% of Farmers & Merchants Bancorp shares are owned by institutional investors. Comparatively, 81.2% of Lakeland Financial shares are owned by institutional investors. 7.3% of Farmers & Merchants Bancorp shares are owned by insiders. Comparatively, 3.0% of Lakeland Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Dividends
Farmers & Merchants Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 2.7%. Lakeland Financial pays an annual dividend of $2.08 per share and has a dividend yield of 3.6%. Farmers & Merchants Bancorp pays out 33.0% of its earnings in the form of a dividend. Lakeland Financial pays out 47.7% 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. Farmers & Merchants Bancorp has raised its dividend for 19 consecutive years and Lakeland Financial has raised its dividend for 14 consecutive years.
Profitability
This table compares Farmers & Merchants Bancorp and Lakeland Financial’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% |
| Lakeland Financial | 26.04% | 14.67% | 1.58% |
Analyst Ratings
This is a breakdown of current ratings and target prices for Farmers & Merchants Bancorp and Lakeland Financial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Farmers & Merchants Bancorp | 0 | 3 | 1 | 0 | 2.25 |
| Lakeland Financial | 0 | 3 | 1 | 0 | 2.25 |
Farmers & Merchants Bancorp currently has a consensus price target of $32.25, suggesting a potential downside of 9.10%. Lakeland Financial has a consensus price target of $66.50, suggesting a potential upside of 14.04%. Given Lakeland Financial’s higher probable upside, analysts plainly believe Lakeland Financial is more favorable than Farmers & Merchants Bancorp.
Summary
Lakeland Financial beats Farmers & Merchants Bancorp on 10 of the 15 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 Lakeland Financial
Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States. The company accepts various deposit products, such as noninterest bearing, interest-bearing checking, savings, money market, NOW, and demand deposits. Its loan products include commercial and industrial, commercial real estate and multi-family residential, construction, agri-business and agricultural, consumer 1-4 family mortgage, and other commercial and consumer loans. The company also provides retail and merchant credit card services; corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; and mobile business banking and on-line treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. The company was founded in 1872 and is headquartered in Warsaw, Indiana.
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