Financial Comparison: Farmers & Merchants Bank of Long Beach (OTCMKTS:FMBL) and Royal Bank of Canada (NYSE:RY)

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

Risk and Volatility

Royal Bank of Canada has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Farmers & Merchants Bank of Long Beach has a beta of 0.41, meaning that its stock price is 59% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Royal Bank of Canada and Farmers & Merchants Bank of Long Beach, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Royal Bank of Canada	0	2	4	0	2.67
Farmers & Merchants Bank of Long Beach	0	0	0	0	N/A

Royal Bank of Canada currently has a consensus target price of $137.67, indicating a potential upside of 32.02%. Given Royal Bank of Canada’s higher possible upside, equities research analysts plainly believe Royal Bank of Canada is more favorable than Farmers & Merchants Bank of Long Beach.

Insider & Institutional Ownership

45.3% of Royal Bank of Canada shares are owned by institutional investors. Comparatively, 7.6% of Farmers & Merchants Bank of Long Beach shares are owned by institutional investors. 12.8% of Farmers & Merchants Bank of Long Beach shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Profitability

This table compares Royal Bank of Canada 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
Royal Bank of Canada	12.43%	14.74%	0.80%
Farmers & Merchants Bank of Long Beach	13.71%	4.61%	0.50%

Dividends

Royal Bank of Canada pays an annual dividend of $4.08 per share and has a dividend yield of 3.9%. Farmers & Merchants Bank of Long Beach pays an annual dividend of $112.00 per share and has a dividend yield of 2.3%. Royal Bank of Canada pays out 51.4% 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. Royal Bank of Canada has increased its dividend for 3 consecutive years. Royal Bank of Canada is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Royal Bank of Canada and Farmers & Merchants Bank of Long Beach’s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Royal Bank of Canada	$87.48 billion	1.69	$11.02 billion	$7.94	13.13
Farmers & Merchants Bank of Long Beach	$431.97 million	1.36	$70.01 million	$485.58	9.89

Royal Bank of Canada 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 Royal Bank of Canada, indicating that it is currently the more affordable of the two stocks.

Summary

Royal Bank of Canada beats Farmers & Merchants Bank of Long Beach on 12 of the 16 factors compared between the two stocks.

About Royal Bank of Canada

Royal Bank of Canada operates as a diversified financial service company worldwide. The company's Personal & Commercial Banking segment offers checking and savings accounts, home equity financing, personal lending, private banking, indirect lending, including auto financing, mutual funds and self-directed brokerage accounts, guaranteed investment certificates, credit cards, and payment products and solutions; and lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small and medium-sized commercial businesses. This segment offers financial products and services through branches, automated teller machines, and mobile sales network. Its Wealth Management segment provides a suite of wealth, investment, trust, banking, credit, and other advice-based solutions and strategies to high net worth and ultra-high net worth individuals, and institutional clients; asset management products to institutional and individual clients; and asset and investor services to financial institutions, asset managers, and asset owners. The company's Insurance segment offers life, health, home, auto, travel, wealth, annuities, property and casualty, and reinsurance advice and solutions; and business insurance services to individual, business, and group clients through its advice centers, RBC insurance stores, and mobile advisors; digital platforms; and independent brokers and partners. The company's Capital Markets segment offers advisory and origination, sales and trading, lending and financing, and transaction banking services to corporations, institutional clients, asset managers, private equity firms, and governments. The company was founded in 1864 and is headquartered in Toronto, Canada.

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.