Value
7.8/10data confidence 83%| Component | Sub-score |
|---|---|
| P/E | 8.4 |
| P/S | 7.4 |
| Fwd P/E | 9.4 |
| PEG | 10.0 |
| Analyst target | 4.0 |
- ▸Forward P/E: 9.4x
- ▸PEG: 0.26
- ▸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 score5.6/10
ConfidenceMEDIUM
MacroNEUTRAL
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. | →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. | →Stable |
| 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. | →Stable |
| 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.
→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.
→StableRisk 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.
→StableEarnings
- 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.
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.
Per-dimension breakdown
Quality
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.6 |
| ROA | 0.7 |
| Gross margin | 0.0 |
| Op margin | 9.0 |
| Net margin | 10.0 |
| Moat | 3.6 |
| Piotroski F | 6.7 |
- ▸Strong margins: 31%
- ▸No competitive moat
Growth
5.5/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 1.9 |
| EPS growth | 9.2 |
- ▸Declining revenue: -2%
Momentum
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 5.0 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 9.0 |
| Volume | 2.5 |
- ▸Volume accumulation (rising OBV)
- ▸Above 200-day MA
Sentiment
6.1/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 6.5 |
| Price target | 6.5 |
| erm sentiment | 5.0 |
- ▸Light analyst coverage (5.0) — signal dampened
Insider
3.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 4.5 |
| insider conviction | 2.0 |
| holder change | 5.1 |
- ▸Modest insider selling — $835,000 (0.030% of mkt cap)
Peer rank
3.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.6 |
| quality rank | 3.9 |
| growth rank | 0.6 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 2.1 |
| 52w position | 9.5 |
Risk (lower is worse)
6.5/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.7 |
| days to cover | 5.9 |
| volatility | 6.1 |
| put call | 10.0 |
| implied vol | 0.6 |
| beta | 7.9 |
- ▸High IV: 76%
- ▸Concentration risks: 2 HIGH (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 4.5 |
| dividend safety | 4.8 |
- ▸Perfect beat streak: 4Q
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Mixed signals. Hold existing position.
Engine technical detail
verdict_path:
L4:PATH_F_HOLD_DEFAULTPassed (6)
- MOMENTUM:7.3>=5.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:19d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (1)
- ASYMMETRY:-0.4=NEGATIVE
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
-0.39
Upside
-3.9%
Downside
10.0%
Sizing output
AVOID
SetupBreakout — Golden cross, above all MAs, RSI 65, MACD bullish
EdgeCatalyst-Driven — Earnings in 19d with 4/4 beat streak
SuitabilityAggressive — MCap $2.7B<$5B
Investment implication
The default F-path HOLD fired without any positive-conviction gate triggering — no momentum acceleration, no quality+value crossover, no setup recognition. Highest-clear gate: MOMENTUM:7.3>=5.5. Top dim: Value at 7.8; weakest: Peer rank at 3.5. The engine's read is one of pattern absence — no directional conviction in either direction at current asymmetry.
The strongest dimensions are Value at 7.8, Momentum at 7.3, and Risk (lower is worse) at 6.5; the weakest are Peer rank at 3.5, Insider at 3.9, and Technical at 4.6. The V9 engine flagged 1 failed gate with 1 warning, producing an asymmetric reward-to-risk of -0.39 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 Setup
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.