First BanCorp. (NYSE:FBP) versus Farmers National Banc (NASDAQ:FMNB) Financial Analysis

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

Institutional and Insider Ownership

38.7% of Farmers National Banc shares are held by institutional investors. Comparatively, 97.9% of First BanCorp. shares are held by institutional investors. 4.0% of Farmers National Banc shares are held by company insiders. Comparatively, 2.5% of First BanCorp. shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Farmers National Banc and First BanCorp., as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers National Banc	0	2	1	0	2.33
First BanCorp.	0	2	3	0	2.60

Farmers National Banc presently has a consensus target price of $16.67, indicating a potential upside of 16.88%. First BanCorp. has a consensus target price of $22.60, indicating a potential upside of 21.77%. Given First BanCorp.’s stronger consensus rating and higher possible upside, analysts clearly believe First BanCorp. is more favorable than Farmers National Banc.

Earnings and Valuation

This table compares Farmers National Banc and First BanCorp.”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers National Banc	$170.92 million	3.14	$49.93 million	$1.23	11.59
First BanCorp.	$889.54 million	3.42	$302.86 million	$1.81	10.25

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Farmers National Banc	17.26%	11.92%	0.95%
First BanCorp.	24.94%	19.91%	1.63%

Dividends

Farmers National Banc pays an annual dividend of $0.68 per share and has a dividend yield of 4.8%. First BanCorp. pays an annual dividend of $0.64 per share and has a dividend yield of 3.4%. Farmers National Banc pays out 55.3% of its earnings in the form of a dividend. First BanCorp. pays out 35.4% 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.

Volatility and Risk

Farmers National Banc has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, First BanCorp. has a beta of 1.12, meaning that its stock price is 12% more volatile than the S&P 500.

Summary

First BanCorp. beats Farmers National Banc on 13 of the 16 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 BanCorp.

First BanCorp. operates as a bank holding company for FirstBank Puerto Rico that provides a range of financial products and services to consumers and commercial customers. The company operates through six segments: Commercial and Corporate Banking, Mortgage Banking, Consumer (Retail) Banking, Treasury and Investments, United States Operations, and Virgin Islands Operations. The Commercial and Corporate Banking segment offers commercial loans, including commercial real estate and construction loans, as well as other products, such as cash management and business management services. The Mortgage Banking segment engages in the origination, sale, and servicing of various residential mortgage loans; hedging activities; and purchase of mortgage loans from branch and mortgage bankers. The Consumer (Retail) Banking segment provides auto loans, finance leases, boat and personal loans, credit card loans, and lines of credit; and interest-bearing and non-interest-bearing checking and savings accounts, and individual retirement accounts and retail certificates of deposit (CDs), as well as insurance agency services. The Treasury and Investments segment offers funding and liquidity management services. The United States Operations segment provides checking, savings, and money market accounts, as well as retail CDs; traditional commercial and industrial, and commercial real estate loans, residential mortgages, term and construction loan, home equity loans, lines of credit, FHLB advances, and brokered CDs; and internet banking, cash management, remote deposit capture, and automated clearing house transactions services. The Virgin Islands Operations segment is involved in consumer, commercial lending, and deposit-taking activities. First BanCorp. was founded in 1948 and is headquartered in San Juan, Puerto Rico.