Critical Comparison: Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) vs. Sumitomo Mitsui Financial Group (NYSE:SMFG)

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

Insider and Institutional Ownership

3.9% of Sumitomo Mitsui Financial Group shares are held by institutional investors. Comparatively, 7.6% of Farmers & Merchants Bank of Long Beach shares are held by institutional investors. 0.1% of Sumitomo Mitsui Financial Group shares are held by company insiders. Comparatively, 12.8% of Farmers & Merchants Bank of Long Beach shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Dividends

Sumitomo Mitsui Financial Group pays an annual dividend of $0.29 per share and has a dividend yield of 2.5%. Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 2.4%. Sumitomo Mitsui Financial Group pays out 33.0% of its earnings in the form of a dividend. Farmers & Merchants Bank of Long Beach pays out 23.1% 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. Sumitomo Mitsui Financial Group has raised its dividend for 1 consecutive years. Sumitomo Mitsui Financial Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Sumitomo Mitsui Financial Group and Farmers & Merchants Bank of Long Beach, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sumitomo Mitsui Financial Group	0	1	0	0	2.00
Farmers & Merchants Bank of Long Beach	0	0	0	0	N/A

Profitability

This table compares Sumitomo Mitsui Financial Group and Farmers & Merchants Bank of Long Beach’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sumitomo Mitsui Financial Group	9.71%	7.27%	0.35%
Farmers & Merchants Bank of Long Beach	13.71%	4.61%	0.50%

Earnings & Valuation

This table compares Sumitomo Mitsui Financial Group and Farmers & Merchants Bank of Long Beach’s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sumitomo Mitsui Financial Group	$45.46 billion	1.67	$6.83 billion	$0.88	13.14
Farmers & Merchants Bank of Long Beach	$431.97 million	1.31	$70.01 million	$485.58	9.56

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

Volatility & Risk

Sumitomo Mitsui Financial Group has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bank of Long Beach has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Summary

Sumitomo Mitsui Financial Group beats Farmers & Merchants Bank of Long Beach on 8 of the 14 factors compared between the two stocks.

About Sumitomo Mitsui Financial Group

Sumitomo Mitsui Financial Group, Inc., together with its subsidiaries, provides banking, leasing, securities, credit card, and consumer finance services in Japan, the Americas, Europe, the Middle East, Asia, and Oceania. It operates through Wholesale Business Unit, Retail Business Unit, Global Business Unit, and Global Markets Business Unit segments. The company was incorporated in 2002 and is headquartered in Tokyo, Japan.

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.