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4 Reasons to Invest in Farmers & Merchants Bancorp (FMAO) Stock
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It seems to be the perfect time to invest in bank stocks. Supported by interest rate hikes and decent growth in loan balances, banks are expected to witness improvements in their top lines. Therefore, we bring one such stock — Farmers & Merchants Bancorp, Inc. (FMAO - Free Report) — which is a solid pick based on its fundamental strength and improving prospects.
The company has been witnessing upward earnings estimate revisions of late, reflecting that analysts are optimistic regarding its earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for FMAO’s current-year earnings has moved 1.1% upward. As a result, the company currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of the company have gained 18.3% against the industry’s decline of 11.8%.
Image Source: Zacks Investment Research
Some factors mentioned below make the FMAO stock an attractive investment option now.
Earnings Strength: Farmers & Merchants Bancorp witnessed earnings per share growth of 10.6% in the last three to five years. The upward momentum is expected to continue in the near term. The company’s earnings are projected to grow 15.8% and 2.3% in 2022 and 2023, respectively.
Farmers & Merchants Bancorp has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Revenue Growth: Farmers & Merchants Bancorp’s revenues have seen a compound annual growth rate of 16.8% over the last five years (2017-2021). The upward momentum continued in the first half of 2022.
Driven by higher rates and loan growth, the company’s top line is expected to improve further. Its projected sales growth rates of 18.6% and 7.7% for 2022 and 2023, respectively, ensure the continuation of the upward revenue trend.
Inorganic Growth Efforts: Farmers & Merchants Bancorp has been undertaking efforts to grow through acquisitions. The deals have been accretive to its earnings. This June, the company announced a deal to acquire Peoples-Sidney Financial Corporation for $27 million.
In October 2021, it acquired Perpetual Federal Savings Bank, Inc., while in April, it closed the deal to buy Ossian Financial Services, Inc. In 2019, FMAO completed the merger with Limberlost Bancshares, Inc., which helped the company expand its presence in northeast Indiana.
Sustainable Capital Deployments: Given a solid balance sheet and liquidity position, Farmers & Merchants Bancorp has been engaging in efficient capital deployment activities, enhancing shareholder value. Recently, the company announced a dividend hike of 10.5%. Prior to the hike, it raised its quarterly dividend by 5.6% in December 2021. It also has a share repurchase program.
Other Stocks Worth Considering
A couple of other top-ranked stocks from the finance space are Associated Banc-Corp (ASB - Free Report) and German American Bancorp, Inc. (GABC - Free Report) .
German American Bancorp’s earnings estimates for 2022 have been revised 7.6% upward over the past 60 days. Its share price has increased 4.2% in the past three months. GABC carries a Zacks Rank #2 at present.
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4 Reasons to Invest in Farmers & Merchants Bancorp (FMAO) Stock
It seems to be the perfect time to invest in bank stocks. Supported by interest rate hikes and decent growth in loan balances, banks are expected to witness improvements in their top lines. Therefore, we bring one such stock — Farmers & Merchants Bancorp, Inc. (FMAO - Free Report) — which is a solid pick based on its fundamental strength and improving prospects.
The company has been witnessing upward earnings estimate revisions of late, reflecting that analysts are optimistic regarding its earnings growth prospects. Over the past 60 days, the Zacks Consensus Estimate for FMAO’s current-year earnings has moved 1.1% upward. As a result, the company currently carries a Zacks Rank #2 (Buy).
Over the past year, shares of the company have gained 18.3% against the industry’s decline of 11.8%.
Image Source: Zacks Investment Research
Some factors mentioned below make the FMAO stock an attractive investment option now.
Earnings Strength: Farmers & Merchants Bancorp witnessed earnings per share growth of 10.6% in the last three to five years. The upward momentum is expected to continue in the near term. The company’s earnings are projected to grow 15.8% and 2.3% in 2022 and 2023, respectively.
Farmers & Merchants Bancorp has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters.
Revenue Growth: Farmers & Merchants Bancorp’s revenues have seen a compound annual growth rate of 16.8% over the last five years (2017-2021). The upward momentum continued in the first half of 2022.
Driven by higher rates and loan growth, the company’s top line is expected to improve further. Its projected sales growth rates of 18.6% and 7.7% for 2022 and 2023, respectively, ensure the continuation of the upward revenue trend.
Inorganic Growth Efforts: Farmers & Merchants Bancorp has been undertaking efforts to grow through acquisitions. The deals have been accretive to its earnings. This June, the company announced a deal to acquire Peoples-Sidney Financial Corporation for $27 million.
In October 2021, it acquired Perpetual Federal Savings Bank, Inc., while in April, it closed the deal to buy Ossian Financial Services, Inc. In 2019, FMAO completed the merger with Limberlost Bancshares, Inc., which helped the company expand its presence in northeast Indiana.
Sustainable Capital Deployments: Given a solid balance sheet and liquidity position, Farmers & Merchants Bancorp has been engaging in efficient capital deployment activities, enhancing shareholder value. Recently, the company announced a dividend hike of 10.5%. Prior to the hike, it raised its quarterly dividend by 5.6% in December 2021. It also has a share repurchase program.
Other Stocks Worth Considering
A couple of other top-ranked stocks from the finance space are Associated Banc-Corp (ASB - Free Report) and German American Bancorp, Inc. (GABC - Free Report) .
Associated Banc-Corp’s earnings estimates have moved 7.9% upward over the past 60 days. Its share price has risen 8.6% in the past three months. ASB currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
German American Bancorp’s earnings estimates for 2022 have been revised 7.6% upward over the past 60 days. Its share price has increased 4.2% in the past three months. GABC carries a Zacks Rank #2 at present.