Head to Head Survey: Farmers & Merchants Bancorp (NASDAQ:FMAO) vs. Horizon Bancorp (IN) (NASDAQ:HBNC)

Farmers & Merchants Bancorp (NASDAQ:FMAO) and Horizon Bancorp (IN) (NASDAQ:HBNC) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, profitability, risk, institutional ownership, analyst recommendations and dividends.

Earnings & Valuation

This table compares Farmers & Merchants Bancorp and Horizon Bancorp (IN)”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$179.19 million	1.89	$25.94 million	$2.32	10.62
Horizon Bancorp (IN)	$213.40 million	3.86	$35.43 million	($3.93)	-4.11

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

Profitability

This table compares Farmers & Merchants Bancorp and Horizon Bancorp (IN)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	17.03%	9.16%	0.95%
Horizon Bancorp (IN)	-51.01%	9.64%	0.97%

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $0.91 per share and has a dividend yield of 3.7%. Horizon Bancorp (IN) pays an annual dividend of $0.64 per share and has a dividend yield of 4.0%. Farmers & Merchants Bancorp pays out 39.2% of its earnings in the form of a dividend. Horizon Bancorp (IN) pays out -16.3% 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 increased its dividend for 19 consecutive years. Horizon Bancorp (IN) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Farmers & Merchants Bancorp has a beta of 0.88, indicating that its share price is 12% less volatile than the S&P 500. Comparatively, Horizon Bancorp (IN) has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Institutional & Insider Ownership

24.0% of Farmers & Merchants Bancorp shares are held by institutional investors. Comparatively, 64.5% of Horizon Bancorp (IN) shares are held by institutional investors. 7.3% of Farmers & Merchants Bancorp shares are held by insiders. Comparatively, 2.8% of Horizon Bancorp (IN) shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings for Farmers & Merchants Bancorp and Horizon Bancorp (IN), as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	1	0	1	3.00
Horizon Bancorp (IN)	1	1	2	1	2.60

Horizon Bancorp (IN) has a consensus price target of $19.67, indicating a potential upside of 21.85%. Given Horizon Bancorp (IN)’s higher probable upside, analysts plainly believe Horizon Bancorp (IN) is more favorable than Farmers & Merchants Bancorp.

Summary

Horizon Bancorp (IN) beats Farmers & Merchants Bancorp on 11 of the 17 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 Horizon Bancorp (IN)

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that engages in the provision of commercial and retail banking services. The company offers checking, saving, money market, certificate of deposits, individual retirement accounts, and time deposits, as well as non-interest- and interest-bearing demand deposits. It also provides commercial, residential real estate, mortgage, home equity, auto, personal, business, agricultural, and SBA loans, as well as credit cards. In addition, the company offers corporate and individual trust and agency, investment management, and real estate investment trust services; debit cards; treasury management; online and mobile banking; wealth, retirement, and estate and trust services; and sells various insurance products. It operates through full-service offices in northern and central Indiana and southern and central Michigan. Horizon Bancorp, Inc. was founded in 1873 and is headquartered in Michigan City, Indiana.