Banco Bradesco (BBD) & Farmers & Merchants Bancorp (NASDAQ:FMAO) Head-To-Head Analysis

Banco Bradesco (NYSE: BBD) and Farmers & Merchants Bancorp (NASDAQ:FMAO) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, profitability, earnings, risk, institutional ownership, dividends and valuation.

Dividends

Banco Bradesco pays an annual dividend of $0.06 per share and has a dividend yield of 0.5%. Farmers & Merchants Bancorp pays an annual dividend of $0.52 per share and has a dividend yield of 1.3%. Banco Bradesco pays out 7.9% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 37.8% 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 & Merchants Bancorp has raised its dividend for 4 consecutive years. Farmers & Merchants Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Banco Bradesco has a beta of 1.89, suggesting that its stock price is 89% more volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.01, suggesting that its stock price is 99% less volatile than the S&P 500.

Institutional and Insider Ownership

2.8% of Banco Bradesco shares are owned by institutional investors. Comparatively, 13.6% of Farmers & Merchants Bancorp shares are owned by institutional investors. 5.0% of Farmers & Merchants Bancorp shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Banco Bradesco 9.87% 17.54% 1.58%
Farmers & Merchants Bancorp 24.47% 9.74% 1.18%

Analyst Ratings

This is a summary of current ratings for Banco Bradesco and Farmers & Merchants Bancorp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Banco Bradesco 0 1 4 0 2.80
Farmers & Merchants Bancorp 0 1 0 0 2.00

Banco Bradesco currently has a consensus price target of $12.40, indicating a potential upside of 8.11%. Given Banco Bradesco’s stronger consensus rating and higher possible upside, equities analysts clearly believe Banco Bradesco is more favorable than Farmers & Merchants Bancorp.

Earnings and Valuation

This table compares Banco Bradesco and Farmers & Merchants Bancorp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Banco Bradesco $46.46 billion 1.65 $4.59 billion $0.76 15.13
Farmers & Merchants Bancorp $51.98 million 7.07 $12.72 million $1.38 28.81

Banco Bradesco has higher revenue and earnings than Farmers & Merchants Bancorp. Banco Bradesco 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.

Summary

Banco Bradesco beats Farmers & Merchants Bancorp on 9 of the 17 factors compared between the two stocks.

About Banco Bradesco

Banco Bradesco S.A. is a commercial bank. The Bank offers a range of banking and financial products and services in Brazil and abroad to individuals, large, mid-sized and small companies, and local and international corporations and institutions. Its segments include Financial; Insurance and Capitalization bonds; Pension plans, and Other Activities. The Financial segment consists of financial institutions and holding companies, which are responsible for managing financial resources, and credit card, consortium and asset management companies. The Insurance Group segment comprises insurance, pension plan and capitalization bond companies. It offers banking services, including deposit-taking activities, individual and corporate banking services, credit and debit cards, leasing operations, investment banking, asset management, consortium services and others. Its insurance services include health insurance, life and personal accident insurance, automobile, casualty and pension plans.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp, Inc. is a bank holding company. The Company’s primary subsidiary, The Farmers & Merchants State Bank (the Bank), is a community bank operating in Northwest Ohio and Northeast Indiana. The Company’s other subsidiary, Farmers & Merchants Risk Management (Captive), is a captive insurance company. The Bank is engaged in general commercial banking business. The Bank’s activities include commercial, agricultural and residential mortgage as well as consumer and credit card lending activities. The Bank’s loan portfolio consists of loans made to customers in the farming industry for such things as farm land, farm equipment, livestock and operating loans for seed, fertilizer and feed. Its other types of lending activities include loans for home improvements and loans for such items as autos, trucks, recreational vehicles and motorcycles. The Bank also provides checking account services, as well as savings and time deposit services, such as certificates of deposits.

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