First Merchants (FRME) AI Stock Analysis

• Market Cap: $2.16B
• Dividend Yield: 3.79%
• Average Volume (3M): 346.35K
• Price to Earnings (P/E): 10.8
• Beta (1Y): 1.16
• Revenue Growth: 5.54%
• EPS Growth: -8.57%
• Country: US
• Employees: 2,120
• Sector: Financial
• Sector Strength: 79
• Industry: Banks - Regional
• EPS (TTM): 3.41
• Shares Outstanding: 58,534,990
• 10 Day Avg. Volume: 360,167
• 30 Day Avg. Volume: 346,350
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 3.86
• Price to Cash Flow (P/CF): 8.70
• P/FCF Ratio: 3.90
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $50.75
• Price Target Upside: 37.50% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 4

First Merchants Corporation's stock scores well due to its strong financial performance, robust valuation, and positive earnings call outcomes. The company has demonstrated solid growth and efficient cost management, although some challenges in profitability margins and specific business segments remain. Technical indicators suggest cautious optimism, but the overall outlook is favorable with attractive valuation metrics.

First Merchants Business Overview & Revenue Model

Company Description

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. It accepts time, savings, and demand deposits; and provides consumer, commercial, agri-business, and real estate mortgage loans, as well as public finance. The company also offers personal and corporate trust; brokerage and private wealth management; and letters of credit, repurchase agreements, and other corporate services. It operates 109 banking locations in Indiana, Illinois, Ohio, and Michigan counties. The company also offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.

How the Company Makes Money

First Merchants Corporation makes money primarily through interest income and non-interest income. Interest income is generated from loans, including commercial, residential, and consumer loans, where the bank earns interest from borrowers. Non-interest income comes from service charges on deposit accounts, fees from wealth management services, mortgage banking income, and other financial service fees. The bank also invests in securities which contribute to their interest income. Additionally, First Merchants benefits from strategic partnerships and acquisitions that expand their market presence and customer base, enhancing revenue generation opportunities.

First Merchants Financial Statement Overview

Summary

First Merchants demonstrates solid financial health with strong revenue growth and a robust balance sheet. While profitability margins have faced some pressure, the absence of debt in recent years enhances stability. Overall, the company maintains a healthy cash flow position, but continued focus on optimizing profitability and liquidity management will be beneficial.

Income Statement

First Merchants has shown consistent revenue growth over the years with a notable increase from $492 million in 2020 to $948 million in 2024. The gross profit margin has remained stable, reflecting efficient cost management. However, the net profit margin has seen fluctuations, decreasing slightly in 2024 compared to prior years, which may indicate rising costs or expenses impacting net income.

Balance Sheet

The balance sheet of First Merchants is robust, with a strong equity position and no total debt reported in 2024, contributing to a favorable debt-to-equity ratio. The equity ratio has remained stable, indicating solid financial health. However, fluctuations in cash and equivalents suggest potential liquidity management challenges.

Cash Flow

The company's cash flow is generally strong, with a positive free cash flow trend, enabling continued investment and financing activities. However, the operating cash flow to net income ratio has decreased slightly, indicating potential challenges in converting earnings into cash. Investment cash flow has been negative, reflecting ongoing investments in business growth.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
948.01M	651.00M	628.14M	520.00M	492.05M
	Gross Profit
948.01M	654.31M	628.14M	520.00M	492.05M
	EBIT
940.62M	259.23M	340.48M	240.79M	169.97M
	EBITDA
0.00	270.94M	267.49M	251.49M	180.98M
	Net Income Common Stockholders
201.40M	223.79M	222.09M	205.53M	148.60M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.47B	2.18B	248.66M	2.99B	2.50B
	Total Assets
18.31B	18.41B	17.94B	15.45B	14.07B
	Total Debt
916.08M	871.50M	974.97M	452.67M	507.81M
	Net Debt
529.58M	322.77M	726.32M	-188.63M	-77.39M
	Total Liabilities
16.01B	16.16B	15.90B	13.54B	12.19B
	Stockholders Equity
2.30B	2.25B	2.03B	1.91B	1.88B
Cash Flow		Free Cash Flow
266.21M	258.83M	268.05M	143.11M	204.81M
	Operating Cash Flow
266.21M	258.83M	268.05M	207.38M	204.81M
	Investing Cash Flow
-252.42M	-344.43M	-446.44M	-1.47B	-1.55B
	Financing Cash Flow
-38.82M	75.65M	133.84M	1.24B	1.36B

First Merchants Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 36.91
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FRME, the sentiment is Negative. The current price of 36.91 is below the 20-day moving average (MA) of 39.18, below the 50-day MA of 41.36, and below the 200-day MA of 38.86, indicating a bearish trend. The MACD of -0.38 indicates Negative momentum. The RSI at 42.82 is Neutral, neither overbought nor oversold. The STOCH value of 24.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FRME.

First Merchants Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FRME	76 Outperform	$2.16B	10.83	8.85%	3.79%	5.54%	-8.57%
TBBK	75 Outperform	$2.26B	10.94	27.24%	―	11.72%	23.37%
PFS	72 Outperform	$2.07B	15.10	5.38%	6.41%	63.85%	-39.11%
FFBC	71 Outperform	$2.23B	9.73	9.72%	4.30%	9.95%	-11.02%
WAFD	68 Neutral	$2.16B	12.21	6.90%	3.97%	29.57%	-36.51%
Sector *	64 Neutral	$13.46B	9.44	9.34%	4.72%	16.14%	-8.80%
BANC	61 Neutral	$2.20B	25.22	3.68%	3.32%	345.02%	―

First Merchants Corporate Events

First Merchants Adopts 2025 Incentive Compensation Program

On February 3, 2025, First Merchants Corporation’s Board of Directors adopted the 2025 Senior Management Incentive Compensation Program (SMICP), a non-equity incentive plan aimed at the company’s named executive officers and senior management. The plan outlines potential cash payments based on a percentage of base salary tied to performance goals, with specific percentages set for each executive. The program is designed to align management’s performance with the corporation’s operating earnings and, for some, the performance of specific business lines. This initiative underscores First Merchants Corporation’s focus on performance-driven compensation and strategic alignment of executive incentives with corporate earnings and business objectives.