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NEW YORK (

TheStreet

)

-- First Merchants

(Nasdaq:

FRME

) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, expanding profit margins, solid stock price performance, growth in earnings per share and notable return on equity. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 163.2% when compared to the same quarter one year prior, rising from $5.46 million to $14.37 million.
  • The gross profit margin for FIRST MERCHANTS CORP is currently very high, coming in at 78.60%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 25.20% significantly outperformed against the industry average.
  • Powered by its strong earnings growth of 170.58% and other important driving factors, this stock has surged by 40.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that other strengths this company displays justify these higher price levels.
  • FIRST MERCHANTS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, FIRST MERCHANTS CORP reported lower earnings of $0.34 versus $0.46 in the prior year. This year, the market expects an improvement in earnings ($0.92 versus $0.34).
  • FRME, with its decline in revenue, slightly underperformed the industry average of 1.6%. Since the same quarter one year prior, revenues slightly dropped by 2.1%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.

.

First Merchants Corporation, a financial holding company, provides financial and banking products and services. Its deposit products include demand deposits, savings deposits, and certificates and other time deposits. The company has a P/E ratio of 35.5, equal to the average banking industry P/E ratio and above the S&P 500 P/E ratio of 17.7. First Merchants has a market cap of $349.1 million and is part of the

TheStreet Recommends

financial

sector and

banking

industry. Shares are up 43.8% year to date as of the close of trading on Friday.

You can view the full

First Merchants Ratings Report

or get investment ideas from our

investment research center

.

-- Written by a member of TheStreet RatingsStaff

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