Head-To-Head Comparison: Esquire Financial (NASDAQ:ESQ) vs. First Merchants (NASDAQ:FRME)

First Merchants (NASDAQ:FRME) and Esquire Financial (NASDAQ:ESQ) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, valuation, earnings, dividends, risk, analyst recommendations and institutional ownership.

Dividends

First Merchants pays an annual dividend of $1.48 per share and has a dividend yield of 3.7%. Esquire Financial pays an annual dividend of $0.80 per share and has a dividend yield of 0.7%. First Merchants pays out 47.4% of its earnings in the form of a dividend. Esquire Financial pays out 13.2% 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. First Merchants has raised its dividend for 13 consecutive years and Esquire Financial has raised its dividend for 4 consecutive years. First Merchants is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares First Merchants and Esquire Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Merchants	17.05%	8.86%	1.12%
Esquire Financial	29.30%	18.22%	2.27%

Insider & Institutional Ownership

73.9% of First Merchants shares are owned by institutional investors. Comparatively, 54.7% of Esquire Financial shares are owned by institutional investors. 1.8% of First Merchants shares are owned by company insiders. Comparatively, 13.9% of Esquire Financial shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

First Merchants has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500. Comparatively, Esquire Financial has a beta of 0.4, suggesting that its stock price is 60% less volatile than the S&P 500.

Earnings and Valuation

This table compares First Merchants and Esquire Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Merchants	$1.05 billion	2.36	$226.00 million	$3.12	12.65
Esquire Financial	$159.56 million	9.02	$50.82 million	$6.06	19.63

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for First Merchants and Esquire Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Merchants	0	2	3	0	2.60
Esquire Financial	0	1	1	2	3.25

First Merchants presently has a consensus target price of $46.00, suggesting a potential upside of 16.51%. Esquire Financial has a consensus target price of $120.33, suggesting a potential upside of 1.16%. Given First Merchants’ higher possible upside, equities analysts clearly believe First Merchants is more favorable than Esquire Financial.

Summary

Esquire Financial beats First Merchants on 10 of the 18 factors compared between the two stocks.

About First Merchants

First Merchants Corporation operates as the financial holding company for First Merchants Bank that provides community banking services. The company offers a range of financial services, including time, savings, and demand deposits; and consumer, commercial, agri-business, public finance, and real estate mortgage loans. It also provides personal and corporate trust; brokerage and private wealth management; and letters of credit, repurchase agreements, and other corporate services. The company operates banking locations in Indiana, Illinois, Ohio, and Michigan counties. It also offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.

About Esquire Financial

Esquire Financial Holdings, Inc. operates as the bank holding company for Esquire Bank, National Association that provides commercial banking products and services to legal industry and small businesses, and commercial and retail customers in the United States. The company offers checking, savings, money market, and time deposits, as well as certificates of deposit. It also provides commercial loans, such as short-term financing for inventory, receivables, the purchase of supplies, or other operating needs arising during the normal course of business, as well as loans to its qualified ISO customers; commercial lines of credit; consumer loans consisting of post-settlement consumer and structured settlement loans to plaintiffs and claimants, as well as loans to individuals for debt consolidation, medical expenses, living expenses, payment of outstanding bills, or other consumer needs; and real estate loans, such as multifamily, 1-4 family residential, commercial real estate, and construction loans, as well as merchant services. In addition, it offers cash management, cash sweep, online and mobile banking, individual retirement accounts, and working capital lines of credit. Esquire Financial Holdings, Inc. was founded in 2006 and is headquartered in Jericho, New York.