top of page

First Merchants Corporation (XNAS:FRME) In-Depth Stock/Fundamental/Options Analysis Today

Primary Facts

FRME

Name:

FIRST MERCHANTS CORPORATION (XNAS:FRME)

Sector:

50.22M

Industry:

Banks�Regional

CEO:

Mr. Michael Rechin

Total Employees:

1,821

Our Technological Advancement Rating

Our Rating:

A

Technological advancement compared to industry is 111.46% higher

ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF FIRST MERCHANTS CORPORATION(FRME) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BANKS�REGIONAL INDUSTRY. DATE: 07/09/2022

Primary Targets/Price Insights

Previous Close ($) :

39.69

One Month Price Target:

$39.94

Six Month Price Target :

$41.2

Likely Price in One Year's Time:

Ticker:

$42.72

Likely Trading Range Today Under (Normal Volatility)
 

$39.52

Price Upper limit ($) :

$39.89

Price Lower limit ($) :

Crash Risk Prep/Key Price Levels (High Volatility/Risk)

Price, as per data analysis, isn't likely to fall below:

Today:

$37.46

                                                               This week:

$34.7

                                                        This month :

$29.72

Other Primary facts

Market Cap:

2.33B

Market Cap Classification:

Mid Cap

Number of Shares

IPO Date:

59.49M

Best/Worst Daily Performance (Last 3+ Years)
 

Highest Daily Appreciation:

15.66%

-13.%

Worst Daily Decline:

Our Options Trading Entry Points

Iron Condor entry points for options expiring in 1 week's time

Low risk (<2%) entry points

Buy Call:

Sell Call:

Buy Put:

Sell Put:

$50.04

$45.30

$29.34

$34.08

Medium risk (<10%) entry points

Buy Call

Sell Call

$43.76

Buy Put:

Sell Put:

$42.75

$35.60

$36.63

These entry points can be used for other strategies, such as butterflies, straddles, etc.

Risk-Adjusted returns (Sharpe Ratio) of

FRME

Sharpe Ratio:

0.95%

Comparison:

FRME, is amongst the top 60% stocks with highest risk-adjusted returns

Sharpe ratio is -22.65% lower than the industry

& is -58.31% lower than the market/S&P 500 average

Average Returns/Yield of

FRME

Daily returns:

0.04%

Weekly returns:

0.18%

Monthly returns:

0.70%

Yearly returns:

10.91%

Comparison of returns:

Average annual returns/yield (last 3 years) is -23.00% below industry average

Classification:

FRME, is amongst the top 60% highest yielding stocks in terms of daily returns

Results of T-Test of Returns:

0.74

Statistical test of Returns:

FRME has yielded returns statistically similar to the market

SHARPE ratio explained.png

Volatility (measured by Standard Deviation)

Daily Volatility:

2.75%

Weekly Volatility:

6.16%

Monthly Volatility:

12.31%

Yearly Volatility:

42.65%

Volitlilty of last five days (Measured by Standard Deviation) 

Average Volatility of this Week:

0.33%

Volatility in last five trading days has been -87.95% below long-term volatility

Value at Risk Analysis (VaR)

Daily VaR:

-5.62%

Weekly VaR:

-12.56%

Monthly VaR:

-25.13%

How Much Can the price of

FRME

Decline in a Recession?

Likely price decline in a recession: 

Base case (decline):

-22%

Worst case (decline):

-87.05%

This translates to price declining to:

$31.03

This translates to price declining to:

$5.14

Severe Crash Probability

Risk of crash in next 6/12 months: Medium (<50%)

What is Value at Risk (VaR)?

VaR explained figure

Risk Fundamentals

FRME is a 77.35% riskier investment compared to the market/S&P 500 & is 51.94% riskier than Nasdaq (IXIC)

Risk (measured by volatility) is -3.63% below industry average

Overall, it is amongst the top 50% most risky stocks

Beta Examination of

FRME

Beta in relation to market/S&P 500--1.13

Expected beta in 1 year's time:

0.755

Expected beta in 3 year's time:

1.068

Unlevered (debt free) Beta:

0.16

Beta in relation to Nasdaq (XNAS):

0.532

Beta in relation to all global stocks::

0.813

Beta Comparison & Analysis

Beta of competitors/peers::

1.111

Beta is 2.13% higher than peers

Average Industry Beta: 

0.964

Beta is 17.75% above industry average

Sustainable Growth Rate Analysis

Sustainable growth rate for this stock/firm:

7.77%

Sustainable growth rate is -14.86% below industry average

Alpha provided | Alpha Analysis 

Alpha provided:

-0.025

Alpha is -317.30% below industry average alpha yield

Alpha is -160% below the market average

Analysis of Cost of Capital of

FRME

Equity cost of capital:

0.109

Equity cost of capital is 12.02% above industry mean WACC

Unlevered (without debt) cost of capital:  

1.54%

Before-tax cost of debt:

-

After-tax cost of debt:

-

Overall debt rating:

-

Weighted average cost of capital (WACC):

-

-

Key Per-Share Metrics & Analysis

Revenue per share:

$8.49

Revenue growth rate per share of (3Y):

1.31

Annual revenue growth rate is -49.22% below industry average

EPS:

$3.80

Expected Annual growth rate of  EPS (3Y):

5.99%

Expected future EPS growth rate is -50.19% lower than the Banks�Regional industry

Free cash flow (FCF) per share:

$3.75

Balance sheet equity growth per share: 35.02%

Equity growth rate per share is -9.57% lower than the industry

Debt per share

$0.00

EBITDA per share

$4.75

Valuation Analysis Today of

FRME

P/E Ratio:

11.58

P/E Ratio of Competitors/Peers:

44.49

P/E ratio is -73.97% lower than main peers & is -6.67% lower than the industry

Stock price/value with industry average P/E ratio: $47.15

FRME is -15.83% undervalued if valued using industry average P/E ratio

Share value as per dividend discount (DDM) model: $37.62

Present value of the expected future dividends only: $13.93

P/S (Price to Sales ratio):

4.68

Price to sales ratio is 9.32% above the industry mean

P/B (Price to book value ratio):

1.31

Price to free cash flow: 10.59

Price to free cash flow ratio is -53.31% lower than the industry

Net income growth rate (3Y):

18.64%

Net income growth rate is -66.15% lower than the industry average net income growth rate

Dividend Analysis

Dividend payout rate: 7.63%

Dividend yeild: 3.00%

Previous Dividend: $0.32

Previous adjusted dividend: $0.32

Previous Dividend: $1.19

Expected next dividend best case: $0.34

Expected next dividend worst case: $0.30

Average dividend payment (long-term): $0.28

Average dividend increase/decrease (growth rate) % per period: 2.19%

Expected next dividend payment date: 15/09/2022

Expected next dividend record date: 09/01/2022

-

Previous dividend payment date: 17/06/2022

Previous dividend record date: 06/03/2022

-

Dividend History:

2022-06-02--$0.32

2021-12-02--$0.29

2021-06-03--$0.29

2022-03-03--$0.29

2021-09-02--$0.29

2021-03-04--$0.26

Dividend growth rate is -90.70% lower than the industry average

In-depth Debt & Leverage Analysis

Debt to equity ratio:

707.98%

Net debt to equity ratio:

-8.20%

Debt to assets ratio:

87.62%

Net debt to assets ratio:

-0.96%

Debt-to-asset ratio is -47.37% below industry average

Ability to repay debt:

Interest coverage ratio:

8.36

Interest coverage ratio is 908.31% more than industry average

Looking forward:

Debt growth rate:

-10.86%

Annual debt growth is -3528% lower than industry average debt growth rate

Debt repayment rate in last quarter: 100.00%

Analysis of Key Statistics  

Correlation of price movement with the market:

0.493

Statistical significance of correlation:

FRME has a statistically significant correlation with the market

Average Correlation of  the industry with the market:

0.501

Stock price is -1.57% less correlated with the market compared to the industry average correlation

R Squared (percentage of price movement explained by movement of the market): 

0.501

Correlation of price movement with Nasdaq (^IXIC):

0.025

Covariance  of price movement with the market:

0.039

Kurtosis 

4.792

Returns have moderate fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns

Skewness of returns:

0.277

Returns are, approximately, symmetrical

Fundamental Analysis & Dupont Analysis of

FRME

Gross Profit Margin Ratio:

-

Operating Profit Margin Ratio:

0.00%

-

Net Profit Margin Ratio:

-

Effective Tax Rate:

14.09%

Effective tax rate is -34.59% lower than the industry

Dupont Method

Net Profit Margin

Return on Equity Ratio (ROE):

×

ROA

=

×

11.32%

Return on equity (ROE) is -5.10% lower than the industry

Financial Leverage

Asset Turnover Ratio (ROA):

1.32%

Return on assets (ROA) is -42.58% lower than the industry

Financial Leverage:

8.1x

Current Ratio:

0

-

Cash Conversion Cycle (days):

0

-

The remaining useful life of property plant & equipment is: -5.8 years

Stock based compensation to net income ratio:

0.54%

In-depth Efficiency  Analysis

Revenue generated per employee:

277.3K

Each employee generates -27% less revenue than industry average revenue per employee

EBITDA generated per employee: 

155.2K

Each employee generates -31% less EBITDA than industry average revenue per employee

Profit generated per employee: 

112.4K

Each employee generates -21% less net income/profit than industry average revenue per employee

Free cash flow (FCF) generated per employee: 

27.6K

Each employee generates -67% less free cash flow than industry average revenue per employee

Assets/Capital per employee

411.2K

Each employee generates -67% less free cash flow than industry average revenue per employee

Research & Development (R&D) Analysis

-

-

Competitors/Peer firms of 

FRME

GOLUB CAPITAL BDC, INC. (XNAS:GBDC)

WESBANCO, INC. (XNAS:WSBC)

ROOT, INC. (XNAS:ROOT)

BRP GROUP, INC. (XNAS:BRP)

Renasant Corporation (XNAS:RNST)

LENDINGTREE, INC. (XNAS:TREE)

GCM Grosvenor Inc. (XNAS:GCMG)

WSFS FINANCIAL CORPORATION (XNAS:WSFS)

FIRST FINANCIAL BANCORP. (XNAS:FFBC)

Current Analyst Ratings

Strong buy�8%

Buy�4%