FMNB

We rate FARMERS NATIONAL BANC CORP /OH/ (FMNB) as Avoid with a composite score of 38.7/100 at a current price of $13.14. The stock falls in the bottom quintile of our universe across key quantitative factors, and the multi-factor weakness suggests a high probability of continued underperformance.

The rating is primarily driven by strength in stability (59th percentile) and value (50th percentile), which together account for the majority of the composite score. Offsetting weakness in investment (30th percentile) and quality (32th percentile) tempers our overall conviction. We assign a No Moat rating (37/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: momentum to confirm whether the current price trend has legs; sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

FARMERS NATIONAL BANC CORP /OH/ holds a top-quartile position (#0 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 38.7/100 places it at rank #3700 in our full 7,333-stock universe. At $542M in market capitalization, FARMERS NATIONAL BANC CORP /OH/ is a small-cap player in the Finance, Insurance, And Real Estate space, which limits certain scale advantages but may allow for more agile strategic execution.

Revenue is growing at 25%, though momentum at the 35th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 0% (-76.5pp vs sector) narrow to operating margins of 21% (+4.4pp vs sector) and net margins of 18.1%, yielding a gross-to-net conversion rate of N/A%. The significant margin erosion from gross to net suggests elevated operating expenses, high interest costs, or other structural drags that warrant monitoring.

At a current price of $13.14, FARMERS NATIONAL BANC CORP /OH/ is trading near fair value based on current fundamentals. Our value factor score of 50/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 10.6x (roughly in line with the sector median of 11.9x), EV/EBITDA of 10.2x (at a premium), P/B of 1.1x, P/S of 1.9x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to FARMERS NATIONAL BANC CORP /OH/. The company exhibits strong financial stability with a beta of 0.64, conservative leverage (19% D/E), and a stability factor in the 59th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: weak quality scores (32th percentile); low beta of 0.64 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 59th percentile and quality factor at the 32th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (19% D/E) limits balance sheet risk; a 4.72% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate FARMERS NATIONAL BANC CORP /OH/'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by disciplined leverage (19% D/E), a 4.72% dividend yield, best-in-class net margins of 18.1%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — FARMERS NATIONAL BANC CORP /OH/ approaches this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 4.72% dividend yield, and the combination of 0.9% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, FARMERS NATIONAL BANC CORP /OH/ receives a Avoid rating with a composite score of 38.7/100 (rank #3700 of 7,333). Our quantitative framework assigns a No Moat (37/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 41/100.

Our analysis does not support a constructive view on FARMERS NATIONAL BANC CORP /OH/ at this time. The combination of limited competitive advantages, low uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.