Comparing F & M Bank (OTCMKTS:FMBM) and Pathward Financial (NASDAQ:CASH)

F & M Bank (OTCMKTS:FMBM) and Pathward Financial (NASDAQ:CASH) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for F & M Bank and Pathward Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
F & M Bank	0	0	0	0	0.00
Pathward Financial	0	0	3	0	3.00

Pathward Financial has a consensus target price of $107.50, indicating a potential upside of 38.28%. Given Pathward Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Pathward Financial is more favorable than F & M Bank.

Valuation and Earnings

This table compares F & M Bank and Pathward Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
F & M Bank	$78.92 million	1.55	$11.23 million	$3.38	10.06
Pathward Financial	$851.49 million	1.93	$185.87 million	$8.42	9.23

Pathward Financial has higher revenue and earnings than F & M Bank. Pathward Financial is trading at a lower price-to-earnings ratio than F & M Bank, indicating that it is currently the more affordable of the two stocks.

Dividends

F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.1%. Pathward Financial pays an annual dividend of $0.20 per share and has a dividend yield of 0.3%. F & M Bank pays out 30.8% of its earnings in the form of a dividend. Pathward Financial pays out 2.4% 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.

Profitability

This table compares F & M Bank and Pathward Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
F & M Bank	14.96%	11.77%	0.88%
Pathward Financial	22.42%	22.35%	2.60%

Volatility and Risk

F & M Bank has a beta of 0.31, meaning that its stock price is 69% less volatile than the S&P 500. Comparatively, Pathward Financial has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Institutional and Insider Ownership

3.9% of F & M Bank shares are held by institutional investors. Comparatively, 92.7% of Pathward Financial shares are held by institutional investors. 10.7% of F & M Bank shares are held by company insiders. Comparatively, 1.4% of Pathward Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Summary

Pathward Financial beats F & M Bank on 13 of the 16 factors compared between the two stocks.

About F & M Bank

F & M Bank Corp. operates as the bank holding company for Farmers & Merchants Bank that provides financial products and services to consumers and businesses in Virginia. The company offers commercial and individual demand and time deposit accounts, savings accounts, money market accounts, internet and mobile banking services, and drive-in banking services. It also provides construction loans, including residential, and land acquisition and development loans; commercial real estate loans; business loans; consumer loans, such as personal loans, automobile loans, deposit account loans, installment and demand loans, and home equity loans; residential mortgage loans; credit cards; dealer finance; farmland loans; multi-family loans; and commercial and industrial loans. In addition, the company offers brokerage services and commercial and personal insurance products. Further, it originates conventional and government agency sponsored mortgages; and offers title insurance and real estate settlement services. The company was founded in 1908 and is headquartered in Timberville, Virginia.

About Pathward Financial

Pathward Financial, Inc. operates as the bank holding company for Pathward, National Association that provides various banking products and services in the United States. The company operates through three segments: Consumer, Commercial, and Corporate Services/Other. It offers demand deposit accounts, savings accounts, and money market savings accounts. The company also provides commercial finance product comprising term lending, asset-based lending, factoring, lease financing, insurance premium finance, government guaranteed lending, and other commercial finance products; consumer credit products; other consumer financing services; tax services, which includes short-term refund advance loans and short-term electronic return originator advance loans; and warehouse financing services. In addition, it issues prepaid cards; and offers payment solutions, such as acceptance, processing, and settlement of credit card and debit card payments. The company was formerly known as Meta Financial Group, Inc. and changed its name to Pathward Financial, Inc. in July 2022. Pathward Financial, Inc. was founded in 1954 and is based in Sioux Falls, South Dakota.