Value
7.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.3 |
| P/S | 7.4 |
| Fwd P/E | 9.4 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 9.5x
- ▸PEG: 0.23
- ▸Attractively valued
FRME · Why this verdict
Why First Merchants (FRME) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.7/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
First Merchants Corporation offers an inexpensive forward multiple of roughly 9 times and a breakout chart structure with four consecutive earnings beats, but with the stock priced essentially at the analyst consensus target, declining revenues, and high geographic concentration, the setup favors waiting for analyst upgrades before adding.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
At roughly 9 times forward earnings and a PEG ratio of 0.26, the stock screens as attractively valued relative to its earnings growth rate, and a golden cross with price above all major moving averages confirms near-term buying interest. Valuation breakdown | The forward price-to-earnings multiple re-rates to at least 11 times within 12 months as earnings consistency attracts value-oriented buyers. | Tripped→Stable |
| CounterThe low multiple reflects a regional bank without an identified competitive moat operating in a concentrated three-state geography; the discount may be structural rather than temporary if investors see no clear path to geographic diversification. | ||
With less than 1% upside remaining to the analyst consensus price target and a risk-to-reward ratio of 0.13, the near-term geometry is unfavorable for new or incremental positions. Price targets | Analyst consensus price target rises above $44, restoring more than 7% upside from current levels and making the setup incrementally attractive. | →Stable |
| CounterFour consecutive earnings beats are exactly the inputs that drive analyst estimate revisions; the current target ceiling may be temporary if the next quarter delivers another positive surprise. | ||
The company's deposit and loan base is concentrated in Indiana, Ohio, and Michigan under the oversight of the FDIC and the Indiana Department of Financial Institutions — a dual geographic and regulatory concentration flagged as two of the highest-severity risks in the annual disclosures. Risk breakdown | Revenue growth turns positive year-over-year for 2 consecutive quarters, demonstrating the concentrated home market is sufficient to sustain top-line expansion. | ↓Deteriorating |
| CounterDeep regional roots can support higher deposit retention and lower funding costs than national competitors with shallow local presence; dominating a concentrated geography is a defensible position in relationship banking. | ||
The company has beaten consensus estimates in each of the last four quarters; while the average positive surprise of roughly 4% is modest, the consistency across a full year of reporting reflects disciplined expense management and reliable guidance. Earnings | EPS continues to beat consensus by at least 1% in each of the next two reported quarters, maintaining the unbroken beat streak. | ↓Deteriorating |
| CounterRevenue is contracting at roughly 2% year-over-year, meaning the beat streak rests on cost efficiency alone; a credit loss event or net-interest-margin compression could erase the thin outperformance buffer in a single quarter. | ||
At roughly 9 times forward earnings and a PEG ratio of 0.26, the stock screens as attractively valued relative to its earnings growth rate, and a golden cross with price above all major moving averages confirms near-term buying interest.
Tripped→StableValuation breakdown
- Expectation
- The forward price-to-earnings multiple re-rates to at least 11 times within 12 months as earnings consistency attracts value-oriented buyers.
CounterThe low multiple reflects a regional bank without an identified competitive moat operating in a concentrated three-state geography; the discount may be structural rather than temporary if investors see no clear path to geographic diversification.
With less than 1% upside remaining to the analyst consensus price target and a risk-to-reward ratio of 0.13, the near-term geometry is unfavorable for new or incremental positions.
→StablePrice targets
- Expectation
- Analyst consensus price target rises above $44, restoring more than 7% upside from current levels and making the setup incrementally attractive.
CounterFour consecutive earnings beats are exactly the inputs that drive analyst estimate revisions; the current target ceiling may be temporary if the next quarter delivers another positive surprise.
The company's deposit and loan base is concentrated in Indiana, Ohio, and Michigan under the oversight of the FDIC and the Indiana Department of Financial Institutions — a dual geographic and regulatory concentration flagged as two of the highest-severity risks in the annual disclosures.
↓DeterioratingRisk breakdown
- Expectation
- Revenue growth turns positive year-over-year for 2 consecutive quarters, demonstrating the concentrated home market is sufficient to sustain top-line expansion.
CounterDeep regional roots can support higher deposit retention and lower funding costs than national competitors with shallow local presence; dominating a concentrated geography is a defensible position in relationship banking.
The company has beaten consensus estimates in each of the last four quarters; while the average positive surprise of roughly 4% is modest, the consistency across a full year of reporting reflects disciplined expense management and reliable guidance.
↓DeterioratingEarnings
- Expectation
- EPS continues to beat consensus by at least 1% in each of the next two reported quarters, maintaining the unbroken beat streak.
CounterRevenue is contracting at roughly 2% year-over-year, meaning the beat streak rests on cost efficiency alone; a credit loss event or net-interest-margin compression could erase the thin outperformance buffer in a single quarter.
Per-dimension breakdown
Quality
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.5 |
| ROA | 0.6 |
| Gross margin | 0.0 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Moat | 4.2 |
| Piotroski F | 7.8 |
- ▸Strong margins: 29%
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.6/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.2 |
| EPS growth | 10.0 |
Momentum
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.5 |
| MACD | 0.0 |
| OBV | 1.0 |
| MA position | 6.0 |
| Volume | 3.7 |
- ▸Volume distribution (falling OBV)
- ▸Above 200-day MA
Sentiment
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 4.8 |
| Analyst rating | 6.5 |
| Price target | 6.6 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 10.0 |
| notable moves | 7.0 |
- ▸Modest insider selling — $835,000 (0.031% of mkt cap)
- ▸Institutions accumulating
Peer rank
3.2/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.9 |
| quality rank | 2.6 |
| growth rank | 1.1 |
Technical
6.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.0 |
| support resistance | 3.8 |
| 52w position | 9.1 |
Risk (lower is worse)
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.5 |
| days to cover | 7.4 |
| volatility | 5.8 |
| implied vol | 5.9 |
| beta | 7.9 |
| news risk | 5.0 |
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 6.7 |
| earnings timing | 5.0 |
| surprise avg | 0.5 |
| dividend safety | 8.0 |
| news activity | 8.0 |
- ▸Strong earnings: 3B/1M
- ▸Dividend: 4.5%
How the verdict was assembled
Engine trigger
Maintain position. Not compelling to add more.
Engine technical detail
verdict_path:
L4:PATH_F_HOLDPassed (4)
- INSIDER:OK
- EARNINGS_PROXIMITY:88d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.2<4.5
- ASYMMETRY:-0.4=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.40
Upside
-3.3%
Downside
8.3%
Sizing output
AVOID
SetupRange Bound — RSI 49 mid-range, Bollinger mid-band
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.7B<$5B
Investment implication
None of the engine's positive-conviction paths (C-quality, D-momentum) triggered — the F-path HOLD reflects balanced signals. Strongest-cleared gate: INSIDER:OK. Top dim: Value at 7.8; weakest: Peer rank at 3.2. No conviction either direction.
The strongest dimensions are Value at 7.8, Risk (lower is worse) at 6.8, and Growth at 6.6; the weakest are Peer rank at 3.2, Momentum at 3.2, and Quality at 5.0. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -0.40 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Consistent Modest Earnings Beats
Trip ifEPS surprise falls below 0% for 2 consecutive reported quarters.
- P2Cheap Valuation With Breakout SetupTripped
Trip ifForward price-to-earnings expands above 13 times without a corresponding acceleration in earnings growth, signaling the valuation opportunity has closed.
- P3Stock At Analyst Target
Trip ifAnalyst consensus price target rises above $45, restoring more than 9% upside from current levels and reversing the at-target constraint.
- P4Geographic Concentration Limits Growth
Trip ifRevenue growth exceeds 5% year-over-year for 2 consecutive quarters, demonstrating the concentrated footprint is sufficient to drive meaningful expansion.