Head to Head Comparison: First Business Financial Services (NASDAQ:FBIZ) and Farmers National Banc (NASDAQ:FMNB)

Farmers National Banc (NASDAQ:FMNB) and First Business Financial Services (NASDAQ:FBIZ) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, risk, valuation, institutional ownership, profitability, analyst recommendations and dividends.

Volatility and Risk

Farmers National Banc has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500. Comparatively, First Business Financial Services has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Institutional & Insider Ownership

38.7% of Farmers National Banc shares are held by institutional investors. Comparatively, 60.1% of First Business Financial Services shares are held by institutional investors. 4.0% of Farmers National Banc shares are held by company insiders. Comparatively, 5.0% of First Business Financial Services shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Farmers National Banc and First Business Financial Services”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers National Banc	$279.92 million	1.70	$54.59 million	$1.45	8.68
First Business Financial Services	$279.25 million	1.54	$50.32 million	$5.95	8.69

Farmers National Banc has higher revenue and earnings than First Business Financial Services. Farmers National Banc is trading at a lower price-to-earnings ratio than First Business Financial Services, indicating that it is currently the more affordable of the two stocks.

Dividends

Farmers National Banc pays an annual dividend of $0.68 per share and has a dividend yield of 5.4%. First Business Financial Services pays an annual dividend of $1.36 per share and has a dividend yield of 2.6%. Farmers National Banc pays out 46.9% of its earnings in the form of a dividend. First Business Financial Services pays out 22.9% 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. First Business Financial Services has raised its dividend for 13 consecutive years.

Profitability

This table compares Farmers National Banc and First Business Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers National Banc	19.50%	13.03%	1.14%
First Business Financial Services	18.02%	14.77%	1.25%

Analyst Recommendations

This is a summary of current ratings for Farmers National Banc and First Business Financial Services, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers National Banc	1	2	1	0	2.00
First Business Financial Services	0	0	4	0	3.00

Farmers National Banc currently has a consensus target price of $14.50, suggesting a potential upside of 15.17%. First Business Financial Services has a consensus target price of $67.00, suggesting a potential upside of 29.62%. Given First Business Financial Services’ stronger consensus rating and higher probable upside, analysts clearly believe First Business Financial Services is more favorable than Farmers National Banc.

Summary

First Business Financial Services beats Farmers National Banc on 11 of the 17 factors compared between the two stocks.

About Farmers National Banc

Farmers National Banc Corp. operates as a bank holding company for The Farmers National Bank of Canfield engages in the banking, trust, retirement consulting, insurance, and financial management businesses. It offers commercial and retail banking services, including checking, savings, and time deposit accounts; commercial, mortgage and installment, and home equity loans; home equity lines of credit, night depository, safe deposit box, money order, bank check, automated teller machine, Internet banking, travel card, E bond transaction, brokerage, and other services. The company also provides personal and corporate trust services in the areas of estate settlement, trust administration, employee benefit plans, and retirement services; property and casualty insurance products and services; and various insurance products through licensed representatives, as well as invests in municipal securities. The company was founded in 1887 and is headquartered in Canfield, Ohio.

About First Business Financial Services

First Business Financial Services, Inc. operates as the bank holding company for First Business Bank that provides commercial banking products and services for small and medium-sized businesses, business owners, executives, professionals, and high net worth individuals in Wisconsin, Kansas, and Missouri. The company offers real estate lending, commercial and industrial lending, asset-based lending, accounts receivable financing, equipment financing loans and leases, floorplan financing, vendor financing, small business administration lending and servicing, treasury management solutions, and company retirement services. It also provides private wealth management for individuals, including creating and executing asset allocation strategies, trust and estate administration, financial planning, investment management, and access to brokerage and custody-only services. In addition, the company offers bank consulting consisting of investment portfolio administrative and asset liability management services, and commercial deposit accounts. The company was founded in 1909 and is headquartered in Madison, Wisconsin.