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4 Factors That Make First Merchant (FRME) A Solid Pick Now

Published 08/16/2017, 09:38 PM
Updated 07/09/2023, 06:31 AM

The earnings season is nearing its end and the finance sector can safely be called one of the best performers. So, we thought of highlighting First Merchants Corporation (NASDAQ:FRME) from this sector because of its strong fundamentals and solid long-term growth potential.

First Merchant has been witnessing upward estimate revisions, reflecting analysts’ optimism. In the last 30 days, the Zacks Consensus Estimate for 2017 and 2018 increased 1.3% and 2%, respectively.

Further, this Zacks Rank #2 (Buy) stock has rallied 4.4% so far this year against the industry’s 5.6% decline.



First Merchant has a number of other aspects that make it an attractive investment option.

Earnings per Share (EPS) Strength: First Merchant has witnessed 18.1% growth in earnings per share over the last three to five years versus the industry’s growth of 11.9%. The trend is expected to continue in the near term, as the company’s projected EPS growth is 15.2% for 2017 (versus 11.6% for the industry).

Further, its long-term (three to five years) expected EPS growth of 7% promises rewards for shareholders.

Revenue Strength: The company’s revenues witnessed a CAGR of 8.5% over the last three years (2014-2016). Further, the top line is expected to grow 22.4% in 2017, much higher than the industry average of 2.6%.

Superior Return on Equity (ROE): First Merchant has ROE of 9.4%, better than the industry average of 9%. This shows that the company reinvests its cash more efficiently.

Leverage: First Merchant’s debt/equity ratio of 0.43 compares favorably with the industry average of 0.46. This leverage status should help the company to perform better than its peers in a dynamic business environment.

Other Stocks to Consider

Some other top-ranked stocks in the finance space are Wintrust Financial Corporation (NASDAQ:WTFC) , Lakeland Financial Corporation (NASDAQ:LKFN) and Old National Bancorp (NASDAQ:ONB) — each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Wintrust Financial Corporation witnessed an upward earnings estimate revision of 5.4% for the current year, in the last 60 days. Its share price has increased 7% in the last 12 months.

The Zacks Consensus Estimate for Lakeland Financial Corporation was revised 4.4% upward for the current year, in the last 60 days. The company’s share price has increased 4.3% in the last 12 months.

Old National Bancorp witnessed upward earnings estimate revision of 0.9% for the current year, in the last 60 days. Its share price has increased 4% in the last 12 months.

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Wintrust Financial Corporation (WTFC): Free Stock Analysis Report

First Merchants Corporation (FRME): Free Stock Analysis Report

Old National Bancorp (ONB): Free Stock Analysis Report

Lakeland Financial Corporation (LKFN): Free Stock Analysis Report

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