_edited.png)
RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
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
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)?
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%
Hold�13%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
505.02M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
-
-
148.07M
153.44M
5.37M
-
736.00K
446.36M
33.82M
10.62M
282.67M
-
204.65M
238.22M
33.57M
204.65M
Statement of Cash Flow
Date:
Period:
2.67M
Differed Income Tax :
- 1665.00K
Stock Based Compensation :
1.10M
Change in Working Capital :
- 468.00K
Accounts Receivables:
-
Other Working Capital:
-
Other Non-Cash Items:
-
Net Cash Provided by Operating Activities:
50.22M
Investments in PP&E:
-
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
148.28M
2.16B
2.31B
56.08M
-
-
2.37B
105.88M
545.39M
24.11M
-
73.42M
-
748.80M
13.85B
15.47B
-
-
-
-
-
-
-
-
-
13.66B
13.66B
-
897.82M
- 84392.0K
994.21M
March 31, 2022 at 6:00:00 AM
-
1.81B
15.47B
-
-
- 148277.0K
35.03M
- 225480.00K
- 190451.00K
- 36975.00K
-
-
- 15607.00K
173.94M
121.36M
-
- 1176.00K
-
-
50.22M
-
50.22M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
FRME
2023
2024
2025
2026
2027
$42.93
$89.50
$96.33
$103.67
$111.58