F & M Bank (OTCMKTS:FMBM) & Magyar Bancorp (NASDAQ:MGYR) Financial Review

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

Risk & Volatility

Magyar Bancorp has a beta of 0.25, meaning that its share price is 75% less volatile than the S&P 500. Comparatively, F & M Bank has a beta of 0.24, meaning that its share price is 76% less volatile than the S&P 500.

Dividends

Magyar Bancorp pays an annual dividend of $0.32 per share and has a dividend yield of 1.9%. F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 3.9%. Magyar Bancorp pays out 20.5% of its earnings in the form of a dividend. F & M Bank pays out 34.7% 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. Magyar Bancorp has increased its dividend for 3 consecutive years.

Insider and Institutional Ownership

46.3% of Magyar Bancorp shares are held by institutional investors. Comparatively, 3.8% of F & M Bank shares are held by institutional investors. 7.4% of Magyar Bancorp shares are held by insiders. Comparatively, 11.6% of F & M Bank shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings for Magyar Bancorp and F & M Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Magyar Bancorp	0	1	0	0	2.00
F & M Bank	0	0	0	0	0.00

Valuation & Earnings

This table compares Magyar Bancorp and F & M Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Magyar Bancorp	$58.42 million	1.87	$9.76 million	$1.56	10.83
F & M Bank	$75.25 million	1.27	$7.28 million	$3.00	8.92

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Magyar Bancorp	15.00%	8.56%	0.97%
F & M Bank	13.58%	11.69%	0.81%

Summary

Magyar Bancorp beats F & M Bank on 10 of the 15 factors compared between the two stocks.

About Magyar Bancorp

Magyar Bancorp, Inc. operates as the holding company for Magyar Bank that provides various consumer and commercial banking services to individuals, businesses, and nonprofit organizations in New Jersey, the United States. It accepts various deposit accounts, including demand, savings, NOW, money market, and retirement accounts, as well as certificates of deposit. The company also provides residential mortgage loans, multi-family and commercial real estate mortgage loans, home equity loans and lines of credit, commercial business loans, and construction loans, as well as small business administration loans. In addition, it offers non-deposit investment products and financial planning services, including insurance products, fixed and variable annuities, and retirement planning for individual and commercial customers; and buys, sells, and holds investment securities. The company has branch offices located in New Brunswick, North Brunswick, South Brunswick, Branchburg, Bridgewater, and Edison, New Jersey. Magyar Bancorp, Inc. was founded in 1922 and is headquartered in New Brunswick, New Jersey.

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.