Financial Survey: MB Financial (MBFI) versus Firstmerit Corp (FMER)

MB Financial (NASDAQ: MBFI) and Firstmerit Corp (NASDAQ:FMER) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, risk, profitability, earnings, dividends, analyst recommendations and valuation.

Insider & Institutional Ownership

74.8% of MB Financial shares are owned by institutional investors. 4.9% of MB Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

MB Financial pays an annual dividend of $0.84 per share and has a dividend yield of 1.8%. Firstmerit Corp pays an annual dividend of $0.68 per share and has a dividend yield of 3.1%. MB Financial pays out 38.4% of its earnings in the form of a dividend. Firstmerit Corp pays out 51.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Valuation & Earnings

This table compares MB Financial and Firstmerit Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MB Financial $928.92 million 4.14 $183.61 million $2.19 20.97
Firstmerit Corp N/A N/A N/A $1.32 16.37

MB Financial has higher revenue and earnings than Firstmerit Corp. Firstmerit Corp is trading at a lower price-to-earnings ratio than MB Financial, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

MB Financial has a beta of 1.18, meaning that its share price is 18% more volatile than the S&P 500. Comparatively, Firstmerit Corp has a beta of 1.2, meaning that its share price is 20% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for MB Financial and Firstmerit Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MB Financial 0 5 3 0 2.38
Firstmerit Corp 0 0 0 0 N/A

MB Financial currently has a consensus price target of $47.38, suggesting a potential upside of 3.17%. Given MB Financial’s higher possible upside, research analysts clearly believe MB Financial is more favorable than Firstmerit Corp.

Profitability

This table compares MB Financial and Firstmerit Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MB Financial 19.12% 7.99% 1.02%
Firstmerit Corp 23.21% 7.73% 0.90%

Summary

MB Financial beats Firstmerit Corp on 9 of the 12 factors compared between the two stocks.

MB Financial Company Profile

MB Financial, Inc. (MB Financial) is a financial holding company. The Company’s segments include banking, leasing and mortgage banking. As of December 31, 2016, the Company’s primary market was the Chicago metropolitan area, in which the Company operated 95 banking offices through its bank subsidiary, MB Financial Bank, N.A. (MB Financial Bank). Through MB Financial Bank, the Company offers a range of financial services to small and middle market businesses, and individuals in the markets that the Company serves. MB Financial Bank’s subsidiaries include LaSalle Systems Leasing, Inc. (LaSalle), Celtic Leasing Corp. (Celtic) and MB Equipment Finance, LLC, (MB Equipment Finance). MB Financial Bank also has a majority owned subsidiary with operating activities, Cedar Hill Associates, LLC (Cedar Hill). The Company operates four primary lines of business within its banking segment: commercial banking, lease banking, retail banking and wealth management.

Firstmerit Corp Company Profile

FirstMerit Corporation is a bank holding company. The Company’s business consists of owning and supervising its affiliates. It operates through FirstMerit Bank, N.A. and its other subsidiaries, providing a range of banking, fiduciary, financial, insurance and investment services to customers throughout Ohio, the Chicago, Illinois-metropolitan area, Michigan, Wisconsin and Western Pennsylvania. Its segments include Commercial, Retail, Wealth and Other. The Commercial segment provides various lending, depository and related financial services. The Retail segment includes consumer lending and deposit gathering, residential mortgage loan origination and servicing, and branch-based small business banking. The Wealth segment offers a range of asset management, private banking, financial planning, estate settlement and administration, credit and deposit products and services. The Other segment includes activities of the parent company, community development operations and the treasury group.

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