A Comparative Study of Farmers National Banc (NASDAQ:FMNB) and Preferred Bank (NASDAQ:PFBC)

Farmers National Banc Corp (NASDAQ:FMNB) and Preferred Bank (NASDAQ:PFBC) are both small-cap finance companies vying to position themselves as leaders in their industry. Both companies present unique strengths and weaknesses that can affect their overall performance. In this article, we will analyze these two companies based on their earnings, dividends, profitability, institutional ownership, risk factors, analyst recommendations, and valuation metrics to determine which business may have the upper hand.

Insider & Institutional Ownership

Institutional investors own 38.7% of Farmers National Banc’s shares, while Preferred Bank enjoys a significantly higher institutional ownership of 72.8%. In addition, 4.0% of Farmers National Banc shares are held by insiders. The strong institutional ownership in Preferred Bank suggests that larger funds and endowments have confidence in its long-term market performance.

Profitability Metrics

To better understand the profitability of each company, let’s look at their net margins, return on equity, and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers National Banc	17.26%	11.92%	0.95%
Preferred Bank	26.20%	19.01%	2.01%

Preferred Bank shows higher metrics in all three key profitability indicators, suggesting a more efficient operation compared to Farmers National Banc.

Dividends Comparison

Farmers National Banc offers an annual dividend of $0.68 per share, translating to a yield of 4.9%. In contrast, Preferred Bank pays out $3.00 per share, leading to a yield of 3.5%. Farmers National Banc has a payout ratio of 55.3%, while Preferred Bank’s is significantly lower at 30.1%. Both companies maintain healthy payout ratios, making it likely they can sustain their dividends in the coming years.

Valuation Metrics

When analyzing the valuation and earnings of both firms, we note differences in revenue, earnings per share (EPS), and price-to-earnings (P/E) ratios.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers National Banc	$170.92 million	3.06	$49.93 million	$1.23	11.31
Preferred Bank	$281.54 million	4.42	$150.04 million	$9.98	8.64

Preferred Bank surpasses Farmers National Banc in both gross revenue and net income figures, and it also trades at a lower P/E ratio, suggesting it may currently be a better value-stock option.

Analyst Opinions

Looking at recent analyst ratings shows some interesting insights. Here’s a summary of recommendations:

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers National Banc	0	2	1	0	2.33
Preferred Bank	0	1	1	0	2.50

Farmers National Banc’s consensus target price is $16.67, suggesting an upside potential of 19.82%, while Preferred Bank has a target price of $99.50, indicating a lower expected upside of 15.35%. Interestingly, the analysts seem to favor Farmers National Banc moderately more due to its higher expected upside.

Volatility and Risk Analysis

When comparing volatility, Farmers National Banc has a beta of 0.86, which indicates that its stock is 14% less volatile than the broader market (S&P 500). Conversely, Preferred Bank has a beta of 0.97, showing it is just slightly less volatile at a 3% margin. This data suggests that Farmers may present a relatively lower risk profile compared to Preferred Bank.

Conclusion

In conclusion, Preferred Bank excels over Farmers National Banc in 11 out of the 15 categories assessed. However, the two companies remain close competitors, each with distinct strengths.

About Farmers National Banc

Farmers National Banc Corp. serves as a bank holding company for The Farmers National Bank of Canfield. The bank offers a variety of financial services including commercial and retail banking, trust, retirement planning, and insurance. Established in 1887 and based in Canfield, Ohio, it has built a strong reputation in community banking.

About Preferred Bank

Preferred Bank specializes in offering commercial banking services to small and medium-sized businesses, entrepreneurs, and high-net-worth individuals. Founded in 1991 and headquartered in Los Angeles, California, it provides a wide range of banking products and services tailored to meet the diverse needs of its clientele.

finance, companies, investments