Analyzing Farmers & Merchants Bancorp (NASDAQ:FMAO) and Danske Bank (OTCMKTS:DNKEY)

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Danske Bank and Farmers & Merchants Bancorp, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Danske Bank	0	4	3	0	2.43
Farmers & Merchants Bancorp	0	3	0	1	2.50

Farmers & Merchants Bancorp has a consensus price target of $33.75, suggesting a potential downside of 7.18%. Given Farmers & Merchants Bancorp’s stronger consensus rating and higher probable upside, analysts clearly believe Farmers & Merchants Bancorp is more favorable than Danske Bank.

Risk and Volatility

Danske Bank has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500.

Dividends

Danske Bank pays an annual dividend of $1.58 per share and has a dividend yield of 5.7%. Farmers & Merchants Bancorp pays an annual dividend of $0.96 per share and has a dividend yield of 2.6%. Danske Bank pays out 67.2% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 30.9% 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. Farmers & Merchants Bancorp has raised its dividend for 19 consecutive years.

Institutional and Insider Ownership

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

Earnings & Valuation

This table compares Danske Bank and Farmers & Merchants Bancorp”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Danske Bank	$8.61 billion	5.22	$3.49 billion	$2.35	11.72
Farmers & Merchants Bancorp	$190.68 million	2.62	$33.31 million	$3.11	11.69

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Danske Bank	41.60%	14.40%	0.65%
Farmers & Merchants Bancorp	21.30%	11.25%	1.22%

Summary

Farmers & Merchants Bancorp beats Danske Bank on 10 of the 18 factors compared between the two stocks.

About Danske Bank

Danske Bank is a financial services group headquartered in Copenhagen, Denmark. Founded in 1871 as Den Danske Landmandsbank, it has grown into a major banking institution in the Nordic region. The bank serves personal, business, corporate and institutional customers. Its offerings include deposit accounts, lending, payment services, mortgages, investment and wealth management, and financial advice. Danske Bank’s main markets are Denmark, Finland, Norway and Sweden, and it also serves customers and businesses in other countries.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp, Inc. is a bank holding company whose primary subsidiary, The Farmers & Merchants State Bank, provides banking services to individuals, businesses and agricultural customers. Its offerings include deposit accounts, commercial and consumer lending, mortgages and other financial services. Founded in 1897, the company is headquartered in Archbold, Ohio, and serves communities in northwest Ohio and northeast Indiana through its banking locations and digital channels.