Farmers & Merchants Bancorp (NASDAQ:FMAO) vs. Horizon Bancorp (IN) (NASDAQ:HBNC) Head to Head Survey

Horizon Bancorp (IN) (NASDAQ:HBNC) and Farmers & Merchants Bancorp (NASDAQ:FMAO) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.

Volatility & Risk

Horizon Bancorp (IN) has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bancorp has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Institutional and Insider Ownership

64.5% of Horizon Bancorp (IN) shares are held by institutional investors. Comparatively, 24.0% of Farmers & Merchants Bancorp shares are held by institutional investors. 2.8% of Horizon Bancorp (IN) shares are held by insiders. Comparatively, 7.3% of Farmers & Merchants Bancorp shares are held 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 Horizon Bancorp (IN) and Farmers & Merchants Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Bancorp (IN)	-51.01%	9.64%	0.97%
Farmers & Merchants Bancorp	17.03%	9.16%	0.95%

Earnings and Valuation

This table compares Horizon Bancorp (IN) 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
Horizon Bancorp (IN)	$213.40 million	3.82	$35.43 million	($3.93)	-4.07
Farmers & Merchants Bancorp	$179.19 million	1.88	$25.94 million	$2.32	10.55

Horizon Bancorp (IN) has higher revenue and earnings than Farmers & Merchants Bancorp. Horizon Bancorp (IN) 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.

Dividends

Horizon Bancorp (IN) pays an annual dividend of $0.64 per share and has a dividend yield of 4.0%. Farmers & Merchants Bancorp pays an annual dividend of $0.91 per share and has a dividend yield of 3.7%. Horizon Bancorp (IN) pays out -16.3% of its earnings in the form of a dividend. Farmers & Merchants Bancorp pays out 39.2% 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 increased its dividend for 19 consecutive years. Horizon Bancorp (IN) is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Horizon Bancorp (IN) and Farmers & Merchants Bancorp, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Bancorp (IN)	0	2	2	1	2.80
Farmers & Merchants Bancorp	0	1	0	1	3.00

Horizon Bancorp (IN) presently has a consensus price target of $19.67, indicating a potential upside of 22.92%. Given Horizon Bancorp (IN)’s higher possible upside, research analysts plainly believe Horizon Bancorp (IN) is more favorable than Farmers & Merchants Bancorp.

Summary

Horizon Bancorp (IN) beats Farmers & Merchants Bancorp on 11 of the 17 factors compared between the two stocks.

About Horizon Bancorp (IN)

Horizon Bancorp, Inc. operates as the bank holding company for Horizon Bank that engages in the provision of commercial and retail banking services. The company offers checking, saving, money market, certificate of deposits, individual retirement accounts, and time deposits, as well as non-interest- and interest-bearing demand deposits. It also provides commercial, residential real estate, mortgage, home equity, auto, personal, business, agricultural, and SBA loans, as well as credit cards. In addition, the company offers corporate and individual trust and agency, investment management, and real estate investment trust services; debit cards; treasury management; online and mobile banking; wealth, retirement, and estate and trust services; and sells various insurance products. It operates through full-service offices in northern and central Indiana and southern and central Michigan. Horizon Bancorp, Inc. was founded in 1873 and is headquartered in Michigan City, Indiana.

About Farmers & Merchants Bancorp

Farmers & Merchants Bancorp, Inc. is a bank holding company, which engages in the provision of commercial banking, retail banking, and financial services. It includes commercial, agricultural, and residential mortgages as well as consumer and credit card lending activities. The firm also offers checking account services, and savings and time deposit services. The company was founded in 1985 and is headquartered in Archbold, OH.