The firm said it upgraded the financial holding company's rating because it reported strong earnings for the first quarter 2014.
The company reported its net income for the first quarter 2014 is $13.6 million, an increase from the $11 million reported in the same quarter in 2013.
First Merchants' total assets equaled $5.5 billion at the end of the quarter.
TheStreet Ratings team rates FIRST MERCHANTS CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate FIRST MERCHANTS CORP (FRME) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, expanding profit margins, good cash flow from operations, increase in net income and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 12.8%. Since the same quarter one year prior, revenues slightly increased by 6.3%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the Commercial Banks industry average, but is less than that of the S&P 500. The net income increased by 11.0% when compared to the same quarter one year prior, going from $10.31 million to $11.45 million.
- The gross profit margin for FIRST MERCHANTS CORP is currently very high, coming in at 90.81%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 18.83% is above that of the industry average.
- Net operating cash flow has significantly increased by 406.36% to $116.87 million when compared to the same quarter last year. In addition, FIRST MERCHANTS CORP has also vastly surpassed the industry average cash flow growth rate of -85.68%.
- FIRST MERCHANTS CORP has improved earnings per share by 6.3% in the most recent quarter compared to the same quarter a year ago. Stable earnings per share over the past year indicate the company has sound management over its earnings and share float. We anticipate these figures will begin to experience more growth in the coming year. During the past fiscal year, FIRST MERCHANTS CORP's EPS of $1.41 remained unchanged from the prior years' EPS of $1.41. This year, the market expects an improvement in earnings ($1.65 versus $1.41).
- You can view the full analysis from the report here: FRME Ratings Report