Critical Contrast: Wintrust Financial (NASDAQ:WTFC) and F & M Bank (OTCMKTS:FMBM)

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

Valuation and Earnings

This table compares Wintrust Financial 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
Wintrust Financial	$2.45 billion	3.06	$695.04 million	$10.31	10.91
F & M Bank	$75.25 million	0.91	$7.28 million	$2.08	9.28

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

Dividends

Wintrust Financial pays an annual dividend of $2.00 per share and has a dividend yield of 1.8%. F & M Bank pays an annual dividend of $1.04 per share and has a dividend yield of 5.4%. Wintrust Financial pays out 19.4% of its earnings in the form of a dividend. F & M Bank pays out 50.0% 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. Wintrust Financial has raised its dividend for 12 consecutive years.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wintrust Financial	0	2	9	2	3.00
F & M Bank	0	0	0	0	0.00

Wintrust Financial presently has a consensus price target of $133.69, indicating a potential upside of 18.88%. Given Wintrust Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Wintrust Financial is more favorable than F & M Bank.

Insider and Institutional Ownership

93.5% of Wintrust Financial shares are held by institutional investors. Comparatively, 3.8% of F & M Bank shares are held by institutional investors. 1.5% of Wintrust Financial shares are held by company insiders. Comparatively, 10.7% of F & M Bank shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk and Volatility

Wintrust Financial has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, F & M Bank has a beta of 0.35, indicating that its share price is 65% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Wintrust Financial	17.52%	12.60%	1.13%
F & M Bank	9.68%	8.77%	0.55%

Summary

Wintrust Financial beats F & M Bank on 16 of the 18 factors compared between the two stocks.

About Wintrust Financial

Wintrust Financial Corporation operates as a financial holding company. It operates in three segments: Community Banking, Specialty Finance, and Wealth Management. The Community Banking segment offers non-interest bearing deposits, non-brokered interest-bearing transaction accounts, and savings and domestic time deposits; home equity, consumer, and real estate loans; safe deposit facilities; and automatic teller machine (ATM), online and mobile banking, and other services. It also engages in the retail origination and purchase of residential mortgages; and provision of lending, deposits, and treasury management services to condominium, homeowner, and community associations, as well as asset-based lending for middle-market companies. In addition, this segment offers loan and deposit services to mortgage brokerage companies; lending to restaurant franchisees; direct leasing; small business administration loans; commercial mortgages and construction loans; and financial solutions. It provides personal and commercial banking services primarily to individuals, small to mid-sized businesses, local governmental units, and institutional clients. The Specialty Finance segment offers commercial and life insurance premiums financing for businesses and individuals; accounts receivable financing, value-added, and out-sourced administrative services; other specialty finance services; equipment financing through structured loan and lease products; and property and casualty premium financing; as well as data processing of payrolls, billing, and cash management services to temporary staffing industry. The Wealth Management segment provides wealth management services, such as trust and investment, asset management, tax-deferred exchange, securities brokerage, and retirement plan services. Wintrust Financial Corporation was founded in 1991 and is headquartered in Rosemont, Illinois.

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.