Head to Head Survey: UMB Financial (NASDAQ:UMBF) versus Farmers & Merchants Bancorp (OTCMKTS:FMCB)

UMB Financial (NASDAQ:UMBF) and Farmers & Merchants Bancorp (OTCMKTS:FMCB) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, profitability, dividends, valuation, analyst recommendations, risk and earnings.

Risk and Volatility

UMB Financial has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.27, suggesting that its share price is 73% less volatile than the S&P 500.

Dividends

UMB Financial pays an annual dividend of $1.60 per share and has a dividend yield of 1.8%. Farmers & Merchants Bancorp pays an annual dividend of $18.60 per share and has a dividend yield of 1.9%. UMB Financial pays out 17.8% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 15.1% 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. UMB Financial has increased its dividend for 32 consecutive years. Farmers & Merchants Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares UMB Financial and Farmers & Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
UMB Financial	15.76%	13.73%	0.98%
Farmers & Merchants Bancorp	30.22%	15.22%	1.62%

Insider & Institutional Ownership

87.8% of UMB Financial shares are held by institutional investors. Comparatively, 5.6% of Farmers & Merchants Bancorp shares are held by institutional investors. 5.5% of UMB Financial shares are held by insiders. Comparatively, 8.0% of Farmers & Merchants Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares UMB Financial 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
UMB Financial	$1.47 billion	4.68	$441.24 million	$8.99	10.06
Farmers & Merchants Bancorp	$292.68 million	2.39	$88.46 million	$123.32	8.11

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for UMB Financial and Farmers & Merchants Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
UMB Financial	0	3	5	0	2.63
Farmers & Merchants Bancorp	0	0	0	0	0.00

UMB Financial presently has a consensus price target of $122.13, suggesting a potential upside of 35.06%. Given UMB Financial’s stronger consensus rating and higher probable upside, equities analysts clearly believe UMB Financial is more favorable than Farmers & Merchants Bancorp.

Summary

UMB Financial beats Farmers & Merchants Bancorp on 10 of the 17 factors compared between the two stocks.

About UMB Financial

UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.

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.