Head-To-Head Review: Farmers National Banc (NASDAQ:FMNB) & Ally Financial (NYSE:ALLY)

Farmers National Banc (NASDAQ:FMNB) and Ally Financial (NYSE:ALLY) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, risk, profitability, earnings and valuation.

Insider and Institutional Ownership

38.7% of Farmers National Banc shares are held by institutional investors. Comparatively, 88.8% of Ally Financial shares are held by institutional investors. 4.0% of Farmers National Banc shares are held by insiders. Comparatively, 0.7% of Ally Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent recommendations for Farmers National Banc and Ally Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers National Banc	0	2	1	0	2.33
Ally Financial	2	8	9	0	2.37

Farmers National Banc currently has a consensus price target of $15.67, suggesting a potential downside of 2.45%. Ally Financial has a consensus price target of $42.78, suggesting a potential downside of 2.73%. Given Farmers National Banc’s higher possible upside, equities research analysts plainly believe Farmers National Banc is more favorable than Ally Financial.

Risk and Volatility

Farmers National Banc has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Ally Financial has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500.

Valuation and Earnings

This table compares Farmers National Banc and Ally Financial’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers National Banc	$255.20 million	2.36	$49.93 million	$1.45	11.08
Ally Financial	$8.21 billion	1.63	$1.02 billion	$2.45	17.95

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

Profitability

This table compares Farmers National Banc and Ally Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers National Banc	19.50%	14.78%	1.09%
Ally Financial	10.26%	8.37%	0.48%

Dividends

Farmers National Banc pays an annual dividend of $0.68 per share and has a dividend yield of 4.2%. Ally Financial pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. Farmers National Banc pays out 46.9% of its earnings in the form of a dividend. Ally Financial pays out 49.0% 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. Farmers National Banc is clearly the better dividend stock, given its higher yield and lower payout ratio.

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 Ally Financial

Ally Financial Inc., a digital financial-services company, provides various digital financial products and services in the United States, Canada, and Bermuda. The company operates through Automotive Finance Operations, Insurance Operations, Mortgage Finance Operations, and Corporate Finance Operations segments. The Automotive Finance Operations segment offers automotive financing services, including providing retail installment sales contracts, loans and operating leases, term loans to dealers, financing dealer floorplans and other lines of credit to dealers, warehouse lines to automotive retailers, and fleet financing. It also provides financing services to companies and municipalities for the purchase or lease of vehicles, and vehicle-remarketing services. The Insurance Operations segment offers consumer finance protection and insurance products through the automotive dealer channel, and commercial insurance products directly to dealers. This segment provides vehicle service and maintenance contract, and guaranteed asset protection products; and underwrites commercial insurance coverages, which primarily insure dealers' vehicle inventory. The Mortgage Finance Operations segment manages consumer mortgage loan portfolio that includes bulk purchases of jumbo and low-to-moderate income mortgage loans originated by third parties, as well as direct-to-consumer mortgage offerings. The Corporate Finance Operations segment provides senior secured leveraged cash flow and asset-based loans to middle market companies; leveraged loans; and commercial real estate product to serve companies in the nursing facilities, senior housing, and medical office buildings. It also offers commercial banking products and services. In addition, it provides securities brokerage and investment advisory services. The company was formerly known as GMAC Inc. and changed its name to Ally Financial Inc. in May 2010. Ally Financial Inc. was founded in 1919 and is based in Detroit, Michigan.