Analyzing Northeast Bancorp (NASDAQ:NBN) and Farmers National Banc (NASDAQ:FMNB)
by Kim Johansen · The Markets DailyFarmers National Banc (NASDAQ:FMNB – Get Free Report) and Northeast Bancorp (NASDAQ:NBN – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.
Institutional and Insider Ownership
38.7% of Farmers National Banc shares are held by institutional investors. 3.5% of Farmers National Banc shares are held by company insiders. Comparatively, 14.2% of Northeast Bancorp shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Dividends
Farmers National Banc pays an annual dividend of $0.72 per share and has a dividend yield of 4.6%. Northeast Bancorp pays an annual dividend of $0.04 per share and has a dividend yield of 0.0%. Farmers National Banc pays out 49.0% of its earnings in the form of a dividend. Northeast Bancorp pays out 0.3% 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 Ratings
This is a breakdown of current ratings and recommmendations for Farmers National Banc and Northeast 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 |
| Northeast Bancorp | 0 | 1 | 2 | 0 | 2.67 |
Farmers National Banc presently has a consensus price target of $16.00, suggesting a potential upside of 2.83%. Northeast Bancorp has a consensus price target of $143.50, suggesting a potential upside of 7.54%. Given Northeast Bancorp’s stronger consensus rating and higher probable upside, analysts plainly believe Northeast Bancorp is more favorable than Farmers National Banc.
Valuation & Earnings
This table compares Farmers National Banc and Northeast Bancorp”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Farmers National Banc | $279.92 million | 3.29 | $54.59 million | $1.47 | 10.59 |
| Northeast Bancorp | $385.07 million | 2.85 | $107.48 million | $12.72 | 10.49 |
Northeast Bancorp has higher revenue and earnings than Farmers National Banc. Northeast 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 Northeast Bancorp’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Farmers National Banc | 20.52% | 12.03% | 1.21% |
| Northeast Bancorp | 27.91% | 19.35% | 2.22% |
Risk and Volatility
Farmers National Banc has a beta of 0.76, meaning that its share price is 24% less volatile than the S&P 500. Comparatively, Northeast Bancorp has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.
Summary
Northeast Bancorp beats Farmers National Banc on 11 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 Northeast Bancorp
Northeast Bank provides banking services to individual and corporate customers in Maine. The company's deposit products include demand deposit, NOW, money market, savings, certificate of deposit, and individual retirement accounts, as well as checking accounts. Its loan portfolio comprises residential mortgage loans; multi-family and other commercial real estate loans; commercial and industrial loans, such as term loans, lines of credit and equipment, and receivables financing; consumer loans comprising mobile home and overdraft, and deposit-secured loans; and small business administration loans. In addition, the company offers telephone banking, online banking and bill payment, mobile banking, cash management, and remote deposit capture services, as well as debit and credit card, ATM, electronic transfer, and check services. Further, it provides various services, such as money market, merchant, and payroll and HR. Northeast Bank was founded in 1872 and is headquartered in Portland, Maine.