Comparing Northeast Community Bancorp (NASDAQ:NECB) and Farmers & Merchants Bancorp (NASDAQ:FMAO)

Northeast Community Bancorp (NASDAQ:NECB) and Farmers & Merchants Bancorp (NASDAQ:FMAO) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.

Institutional and Insider Ownership

53.3% of Northeast Community Bancorp shares are owned by institutional investors. Comparatively, 24.0% of Farmers & Merchants Bancorp shares are owned by institutional investors. 6.3% of Northeast Community Bancorp shares are owned by company insiders. Comparatively, 7.3% of Farmers & Merchants Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Northeast Community Bancorp and Farmers & Merchants Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Northeast Community Bancorp	$158.21 million	2.15	$44.41 million	$3.26	7.44
Farmers & Merchants Bancorp	$190.68 million	2.13	$33.31 million	$2.42	12.22

Northeast Community Bancorp has higher earnings, but lower revenue than Farmers & Merchants Bancorp. Northeast Community Bancorp 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.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Northeast Community Bancorp and Farmers & Merchants Bancorp, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Northeast Community Bancorp	0	1	1	0	2.50
Farmers & Merchants Bancorp	0	2	0	0	2.00

Risk & Volatility

Northeast Community Bancorp has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Dividends

Northeast Community Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 3.3%. Farmers & Merchants Bancorp pays an annual dividend of $0.92 per share and has a dividend yield of 3.1%. Northeast Community Bancorp pays out 24.5% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 38.0% 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. Northeast Community Bancorp has raised its dividend for 2 consecutive years and Farmers & Merchants Bancorp has raised its dividend for 19 consecutive years. Northeast Community Bancorp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Northeast Community Bancorp	28.07%	13.22%	2.23%
Farmers & Merchants Bancorp	17.47%	9.45%	0.99%

Summary

Northeast Community Bancorp beats Farmers & Merchants Bancorp on 11 of the 16 factors compared between the two stocks.

About Northeast Community Bancorp

Northeast Community Bancorp, Inc. operates as the holding company for NorthEast Community Bank that provides financial services for individuals and businesses. It accepts various deposit instruments, including checking accounts, money market accounts, regular savings accounts, and non-interest bearing demand accounts, as well as certificates of deposits. The company also offers construction, commercial and industrial, multifamily and mixed-use real estate, non-residential real estate loans, and consumer loans. In addition, it invests in various types of liquid assets, including U.S. Treasury obligations, municipal securities, deposits at the Federal Home Loan Bank of New York, and certificates of deposit of federally insured institutions, as well as securities of various federal agencies, and of state and municipal governments. Further, the company offers financial planning and investment advisory services; and life insurance products and fixed-rate annuities. It operates full-service branches located in Bronx, New York, Orange, Rockland, and Sullivan Counties in New York and Essex, Middlesex, and Norfolk Counties in Massachusetts; and loan production offices located in White Plains, New York, and New City counties in New York and Danvers, Massachusetts. Northeast Community Bancorp, Inc. was founded in 1934 and is headquartered in White Plains, New York.

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.