Head to Head Comparison: Farmers & Merchants Bancorp (OTCMKTS:FMCB) versus Sandy Spring Bancorp (NASDAQ:SASR)

Farmers & Merchants Bancorp (OTCMKTS:FMCB) and Sandy Spring Bancorp (NASDAQ:SASR) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, institutional ownership, earnings and dividends.

Risk and Volatility

Farmers & Merchants Bancorp has a beta of 0.22, indicating that its share price is 78% less volatile than the S&P 500. Comparatively, Sandy Spring Bancorp has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Farmers & Merchants Bancorp and Sandy Spring Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bancorp	0	0	0	0	0.00
Sandy Spring Bancorp	0	4	0	0	2.00

Sandy Spring Bancorp has a consensus price target of $28.25, suggesting a potential downside of 11.64%. Given Sandy Spring Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Sandy Spring Bancorp is more favorable than Farmers & Merchants Bancorp.

Dividends

Farmers & Merchants Bancorp pays an annual dividend of $18.60 per share and has a dividend yield of 1.8%. Sandy Spring Bancorp pays an annual dividend of $1.36 per share and has a dividend yield of 4.3%. Farmers & Merchants Bancorp pays out 15.4% of its earnings in the form of a dividend. Sandy Spring Bancorp pays out 302.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bancorp	30.22%	15.22%	1.62%
Sandy Spring Bancorp	2.65%	5.31%	0.61%

Earnings and Valuation

This table compares Farmers & Merchants Bancorp and Sandy Spring Bancorp”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bancorp	$292.68 million	2.49	$88.46 million	$121.02	8.59
Sandy Spring Bancorp	$404.22 million	3.57	$19.93 million	$0.45	71.04

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

Insider & Institutional Ownership

5.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. Comparatively, 66.9% of Sandy Spring Bancorp shares are owned by institutional investors. 8.0% of Farmers & Merchants Bancorp shares are owned by company insiders. Comparatively, 3.4% of Sandy Spring Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Summary

Sandy Spring Bancorp beats Farmers & Merchants Bancorp on 8 of the 15 factors compared between the two stocks.

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.

About Sandy Spring Bancorp

Sandy Spring Bancorp, Inc. operates as the bank holding company for Sandy Spring Bank that provides commercial and retail banking, mortgage, private banking, and trust services to individuals and businesses in the United States. It offers financial products and services, including various loan and deposit products. Its loan products include commercial real estate loans, construction loans, and business loans; residential real estate loans; and consumer loans comprising home equity loans and lines, installment loans, and personal lines of credit. The company provides investment management, financial planning, and wealth management services. Sandy Spring Bancorp, Inc. was founded in 1868 and is headquartered in Olney, Maryland.