Farmers & Merchants Bancorp (FMAO) AI Stock Analysis

• Market Cap: $355.57M
• Dividend Yield: 3.18%
• Average Volume (3M): 22.27K
• Price to Earnings (P/E): 10.7
• Beta (1Y): 0.97
• Revenue Growth: 6.52%
• EPS Growth: 36.77%
• Country: US
• Employees: 482
• Sector: Financial
• Sector Strength: 70
• Industry: Banks - Regional
• EPS (TTM): 0.71
• Shares Outstanding: 13,749,944
• 10 Day Avg. Volume: 19,130
• 30 Day Avg. Volume: 22,273
• PEG Ratio: 0.13
• Price to Book (P/B): 0.92
• Price to Sales (P/S): 1.79
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.57
• Enterprise Value/Revenue: 2.97
• Enterprise Value/Gross Profit: 4.79
• Enterprise Value/Ebitda: 11.68
• 1Y Price Target: $29.00
• Price Target Upside: 12.14% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 2.61
• Revenue Forecast (FY): $129.88M

• Rating: 72 Outperform
• Price Target: $29.00 ▲(12.14% Upside)
• Action: Upgraded Date: 01/28/26
• Date: Action: Upgraded 01/28/26

The score is driven primarily by solid financial performance (improving leverage and strong cash conversion, offset by declining FCF growth and an unusually high net margin) and attractive valuation (low P/E and 3.44% yield). Technicals are mildly supportive, and the newly authorized ~4.7% share repurchase adds a positive catalyst.

Positive Factors

Strong cash generation

High cash conversion (FCF to net income ~93%) indicates the franchise converts accounting profits into real cash. Durable cash generation supports lending, deposit funding, capital returns, and cushions the bank through interest‑rate cycles, enabling sustainable strategic investments.

Improved leverage and capital structure

A lower debt-to-equity ratio (0.68 TTM) reduces solvency and regulatory risk and increases financial flexibility. This improvement supports measured loan growth, dividend/repurchase capacity, and resilience to credit stress, making the business model more durable over time.

Share repurchase authorization

A formal repurchase authorisation (~4.7% of shares) signals management confidence and disciplined capital allocation. Over the medium term, executed buys can be accretive to EPS, return excess capital to shareholders, and indicate a focus on shareholder value rather than short-term market timing.

Negative Factors

Declining free cash flow growth

A near‑term drop in FCF growth (-19.2%) is a structural concern if persistent: it reduces internal funds for lending, reserves, and capital returns. Sustained negative FCF growth could force higher external financing or slower franchise reinvestment, constraining long‑term growth options.

Unusually high net profit margin

Anomalously high reported net margin (70%+) raises questions about earnings quality. If driven by one‑offs or accounting items, margin normalization would materially reduce sustainable profitability, complicating forecasts and implying weaker recurring earnings power than headline metrics suggest.

Moderate return on equity

A mid‑single digit ROE (~9.2%) implies limited capital efficiency relative to many regional peers. Absent higher loan growth, margin expansion, or leverage within risk tolerances, ROE may constrain long‑term shareholder returns and require sustained operational improvement to lift profitability.

Farmers & Merchants Bancorp Business Overview & Revenue Model

Company Description

Farmers & Merchants Bancorp, Inc. operates as the bank holding company for The Farmers & Merchants State Bank that provides commercial banking services to individuals and small businesses in northwest Ohio and northeast Indiana. The company offers checking, savings, and time deposit accounts; certificates of deposit; and custodial services for individual retirement and health savings accounts. It also provides commercial, agricultural, and residential mortgage, as well as consumer and credit card lending products; loans for farmland, farm equipment, and livestock; operating loans for seeds, fertilizers, and feeds; home improvement loans; and loans for autos, trucks, recreational vehicles, and motorcycles. In addition, the company offers commercial real estate loans, such as lines of credit and machinery purchase loans. Further, it provides automated teller machine or interactive teller machine services; and online and mobile banking, remote deposit capture or electronic deposit processing, and merchant credit card services. It also offers electronic transaction origination, such as wire and automated clearing house file transmittal services. Farmers & Merchants Bancorp, Inc. was founded in 1897 and is headquartered in Archbold, Ohio.

How the Company Makes Money

Farmers & Merchants Bancorp generates revenue primarily through net interest income, which is the difference between the interest earned on loans and the interest paid on deposits. Key revenue streams include interest income from commercial and consumer loans, residential mortgages, and investment securities. Additionally, the bank earns non-interest income through fees for services such as account maintenance, transaction fees, and wealth management services. The company's financial health is bolstered by its relationships with local businesses and community organizations, which contribute to its deposit base and loan demand. Overall, FMAO's earnings are influenced by interest rate trends, loan growth, and efficient management of operating expenses.

Farmers & Merchants Bancorp Financial Statement Overview

Summary

Financials are solid overall: income statement strength (revenue growth and healthy operating margins) is tempered by an unusually high net margin that may reflect non-recurring factors. The balance sheet shows improved leverage (debt-to-equity down to 0.68) with moderate ROE (9.16%). Cash generation is strong (FCF to net income 93.4%), but declining FCF growth (-19.2%) is a notable watch item.

Income Statement

Farmers & Merchants Bancorp shows a strong revenue growth trajectory with a TTM revenue growth rate of 1.71%. The gross profit margin is healthy at 57.5%, indicating efficient cost management. However, the net profit margin of 70.4% appears unusually high, suggesting potential one-time gains or accounting adjustments. EBIT and EBITDA margins are solid, reflecting operational efficiency.

Balance Sheet

The company's debt-to-equity ratio has improved to 0.68 in the TTM, indicating a reduction in leverage compared to previous years. Return on equity is moderate at 9.16%, showing decent profitability. The equity ratio is stable, suggesting a balanced capital structure. However, the high leverage in past years poses a potential risk if not managed carefully.

Cash Flow

Operating cash flow is strong, with a high free cash flow to net income ratio of 93.4%, indicating efficient cash generation. However, the free cash flow growth rate is negative at -19.2%, which could be a concern if it persists. The operating cash flow to net income ratio is not available, limiting a complete assessment of cash flow efficiency.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	189.09M	176.56M	152.05M	113.66M	92.17M
Gross Profit	117.75M	98.63M	91.89M	94.70M	81.38M
EBITDA	42.52M	38.95M	34.13M	44.49M	34.49M
Net Income	33.31M	25.94M	22.79M	32.52M	23.50M
Balance Sheet
Total Assets	3.43B	3.36B	3.28B	3.02B	2.64B
Cash, Cash Equivalents and Short-Term Investments	519.32M	601.41M	502.13M	478.32M	576.33M
Total Debt	300.03M	308.09M	328.67M	226.28M	127.80M
Total Liabilities	3.06B	3.03B	2.97B	2.72B	2.34B
Stockholders Equity	370.86M	335.21M	316.54M	298.14M	297.17M
Cash Flow
Free Cash Flow	0.00	30.60M	11.22M	38.07M	32.78M
Operating Cash Flow	0.00	32.47M	22.15M	40.67M	34.74M
Investing Cash Flow	0.00	-44.36M	-194.09M	-389.90M	-265.69M
Financing Cash Flow	0.00	46.04M	229.73M	252.82M	236.07M

Farmers & Merchants Bancorp Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 25.86
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FMAO, the sentiment is Negative. The current price of 25.86 is below the 20-day moving average (MA) of 27.64, below the 50-day MA of 26.46, and above the 200-day MA of 25.10, indicating a neutral trend. The MACD of 0.11 indicates Positive momentum. The RSI at 42.74 is Neutral, neither overbought nor oversold. The STOCH value of 22.68 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FMAO.

Farmers & Merchants Bancorp Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
USCB	76 Outperform	$342.83M	14.23	14.96%	2.10%	15.45%	52.68%
FMAO	72 Outperform	$355.57M	10.66	8.98%	3.18%	6.52%	36.77%
BWFG	71 Outperform	$367.88M	10.49	10.04%	1.66%	2.52%	85.94%
SFST	69 Neutral	$459.63M	14.92	7.65%	―	4.74%	86.27%
WTBA	69 Neutral	$412.51M	12.68	13.14%	4.39%	4.47%	49.09%
PDLB	68 Neutral	$390.02M	13.65	5.48%	―	16.03%	145.10%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%

Farmers & Merchants Bancorp Corporate Events

Farmers & Merchants Bancorp Announces New Share Repurchase

On January 27, 2026, Farmers & Merchants Bancorp, Inc. announced that its board of directors had authorized a share repurchase program for up to 650,000 shares, representing approximately 4.7% of its outstanding common stock, with purchases permitted in the open market or through privately negotiated transactions from January 27, 2026, through December 31, 2026. The move signals the company’s capital management strategy and may be interpreted as a sign of confidence in its financial position and long-term value, with potential implications for shareholder returns and earnings per share over the duration of the program.

The most recent analyst rating on (FMAO) stock is a Hold with a $26.00 price target. To see the full list of analyst forecasts on Farmers & Merchants Bancorp stock, see the FMAO Stock Forecast page.