Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) and Intercorp Financial Services (NYSE:IFS) Critical Analysis

Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) and Intercorp Financial Services (NYSE:IFS) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Valuation and Earnings

This table compares Farmers & Merchants Bank of Long Beach and Intercorp Financial Services”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Farmers & Merchants Bank of Long Beach	$431.97 million	1.53	$70.01 million	$427.35	12.87
Intercorp Financial Services	$1.63 billion	N/A	$286.85 million	$2.11	12.77

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

Profitability

This table compares Farmers & Merchants Bank of Long Beach and Intercorp Financial Services’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Farmers & Merchants Bank of Long Beach	11.52%	3.97%	0.44%
Intercorp Financial Services	14.94%	8.97%	0.99%

Volatility and Risk

Farmers & Merchants Bank of Long Beach has a beta of 0.41, indicating that its stock price is 59% less volatile than the S&P 500. Comparatively, Intercorp Financial Services has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Institutional & Insider Ownership

7.6% of Farmers & Merchants Bank of Long Beach shares are held by institutional investors. 12.8% of Farmers & Merchants Bank of Long Beach shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 2.0%. Intercorp Financial Services pays an annual dividend of $0.95 per share and has a dividend yield of 3.5%. Farmers & Merchants Bank of Long Beach pays out 26.2% of its earnings in the form of a dividend. Intercorp Financial Services pays out 45.0% 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Farmers & Merchants Bank of Long Beach and Intercorp Financial Services, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Farmers & Merchants Bank of Long Beach	0	0	0	0	N/A
Intercorp Financial Services	0	0	1	0	3.00

Intercorp Financial Services has a consensus price target of $30.00, suggesting a potential upside of 11.32%. Given Intercorp Financial Services’ higher possible upside, analysts plainly believe Intercorp Financial Services is more favorable than Farmers & Merchants Bank of Long Beach.

Summary

Intercorp Financial Services beats Farmers & Merchants Bank of Long Beach on 9 of the 14 factors compared between the two stocks.

About Farmers & Merchants Bank of Long Beach

Farmers & Merchants Bank of Long Beach provides various banking products and services to individuals, professionals, and small to medium-sized businesses in Los Angeles, Orange, and Santa Barbara Counties. It offers checking, savings, Christmas club savings, health savings, market rate savings, and money market accounts; demand and time deposits; certificates of deposit; and individual retirement account. The company also provides personal, home, commercial real estate, real estate and construction, and commercial business loans, as well as lines of credit; financing for residential loans comprising single-family and multifamily loans; and credit and debit cards. In addition, it offers account management, receivables and payables, and risk management services; commercial lending services; and faith-based and healthcare banking services, as well as online and mobile banking services. Farmers & Merchants Bank of Long Beach was founded in 1907 and is headquartered in Long Beach, California.

About Intercorp Financial Services

Intercorp Financial Services Inc., together with its subsidiaries, offers banking, insurance, wealth management, and payment services for retail and commercial clients in Peru. The company provides loans, credit facilities, deposits, and current accounts; life annuity products with single-premium payment and conventional life insurance products, as well as other retail insurance products; and brokerage and investment management services. It engages in the development, management, operation, and processing of credit and debit cards; facilitation of payments and services through commercial stores; and installation and maintenance of infrastructure for transactions through electronic commerce modality and networks of payment methods processors. The company was incorporated in 1897 and is based in Lima, Peru. Intercorp Financial Services Inc. operates as a subsidiary of Intercorp Perú Ltd.