Critical Comparison: Farmers & Merchants Bancorp (NASDAQ:FMAO) & University Bancorp (OTCMKTS:UNIB)

University Bancorp (OTCMKTS:UNIB) and Farmers & Merchants Bancorp (NASDAQ:FMAO) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for University Bancorp and Farmers & Merchants Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
University Bancorp	0	0	0	0	0.00
Farmers & Merchants Bancorp	0	2	0	0	2.00

Institutional & Insider Ownership

24.0% of Farmers & Merchants Bancorp shares are held by institutional investors. 63.7% of University Bancorp shares are held by insiders. Comparatively, 7.3% of Farmers & Merchants Bancorp shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
University Bancorp	N/A	N/A	N/A
Farmers & Merchants Bancorp	17.03%	9.16%	0.95%

Volatility & Risk

University Bancorp has a beta of 0.18, suggesting that its stock price is 82% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Valuation & Earnings

This table compares University Bancorp 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
University Bancorp	$125.26 million	N/A	$10.47 million	N/A	N/A
Farmers & Merchants Bancorp	$179.19 million	1.93	$25.94 million	$2.32	10.85

Farmers & Merchants Bancorp has higher revenue and earnings than University Bancorp.

Dividends

University Bancorp pays an annual dividend of $0.30 per share and has a dividend yield of 1.5%. Farmers & Merchants Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 3.7%. Farmers & Merchants Bancorp pays out 39.7% of its earnings in the form of a dividend. Farmers & Merchants Bancorp has raised its dividend for 19 consecutive years. Farmers & Merchants Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Farmers & Merchants Bancorp beats University Bancorp on 10 of the 12 factors compared between the two stocks.

About University Bancorp

University Bancorp, Inc. operates as the bank holding company for University Bank that provides various personal, business, and community banking services in the United States. It offers checking, NOW, savings, money market, time deposit, and certificates of deposit accounts. The company's consumer loans include home equity, short term, automobile, personal, and recreational vehicle loans, as well as home equity lines of credits; SBA, commercial real estate, equipment, home improvement, and other instalment loans; and non-profit loans, as well as working capital lines of credit. In addition, the company provides foreign currency exchange; reverse mortgage; online banking and bill pay; online reorder checks; wire transfer; and courier services, as well as credit card and ATM services. Further, it offers life, health, property, and casualty insurance products, as well as investment products, including annuities. University Bancorp, Inc. was founded in 1890 and is based in Ann Arbor, Michigan.

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.