Contrasting Valley National Bancorp (NASDAQ:VLY) and Farmers & Merchants Bancorp (OTCMKTS:FMCB)

Valley National Bancorp (NASDAQ:VLY) and Farmers & Merchants Bancorp (OTCMKTS:FMCB) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, risk, dividends and analyst recommendations.

Volatility & Risk

Valley National Bancorp has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.22, meaning that its stock price is 78% less volatile than the S&P 500.

Dividends

Valley National Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 4.2%. Farmers & Merchants Bancorp pays an annual dividend of $18.60 per share and has a dividend yield of 1.8%. Valley National Bancorp pays out 63.8% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 15.4% 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.

Earnings & Valuation

This table compares Valley National Bancorp and Farmers & Merchants Bancorp”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Valley National Bancorp	$3.58 billion	1.48	$380.27 million	$0.69	15.10
Farmers & Merchants Bancorp	$292.68 million	2.45	$88.46 million	$121.02	8.47

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

Institutional and Insider Ownership

61.0% of Valley National Bancorp shares are held by institutional investors. Comparatively, 5.6% of Farmers & Merchants Bancorp shares are held by institutional investors. 1.9% of Valley National Bancorp shares are held by insiders. Comparatively, 8.0% of Farmers & Merchants Bancorp shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Valley National Bancorp	10.62%	5.14%	0.55%
Farmers & Merchants Bancorp	30.22%	15.22%	1.62%

Analyst Recommendations

This is a summary of current ratings and price targets for Valley National Bancorp and Farmers & Merchants Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Valley National Bancorp	0	6	3	0	2.33
Farmers & Merchants Bancorp	0	0	0	0	0.00

Valley National Bancorp presently has a consensus price target of $10.67, suggesting a potential upside of 2.37%. Given Valley National Bancorp’s stronger consensus rating and higher probable upside, equities analysts plainly believe Valley National Bancorp is more favorable than Farmers & Merchants Bancorp.

Summary

Valley National Bancorp beats Farmers & Merchants Bancorp on 9 of the 16 factors compared between the two stocks.

About Valley National Bancorp

Valley National Bancorp operates as the holding company for Valley National Bank that provides various commercial, private banking, retail, insurance, and wealth management financial services products. It operates through Consumer Banking, Commercial Banking, and Treasury and Corporate other segments. The company offers non-interest bearing, savings, NOW, money market, and time deposit accounts; commercial and industrial, commercial real estate, residential mortgage, and automobile loans; loans secured by the cash surrender value of life insurance; home equity loans and lines of credit; automobile financing; and secured and unsecured other consumer loans. It also invests in various securities and interest-bearing deposits with other banks; and provides international banking services, such as standby and documentary letters of credit, and related products, as well as foreign exchange transactions, documentary collections, and foreign wire transfers services. In addition, the company offers investment services for individuals and small to medium sized businesses; and trusts investment strategies designed for various investment profiles and objectives. Further, it provides trust services, such as living and testamentary trusts, investment management, custodial and escrow services, and estate administration to individuals; tax credit advisory services; brokerage services; property and casualty, life, health, and title insurance agency services; and health care equipment lending and other commercial equipment leasing services, as well as owns real estate related investments. Additionally, the company offers online, mobile, and telephone banking services; receivable, payment, and security solution, merchant, payroll processing, and liquidity services; credit cards; and drive-in and night deposit, automated teller machine, remote deposit capture, and safe deposit facility services. Valley National Bancorp was founded in 1927 and is headquartered in Morristown, New Jersey.

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.