Critical Survey: Firstmerit Corp (FMER) and First Community Bancshares (FCBC)

Firstmerit Corp (NASDAQ: FMER) and First Community Bancshares (NASDAQ:FCBC) are both financials companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, valuation, institutional ownership, earnings, dividends and risk.

Valuation and Earnings

This table compares Firstmerit Corp and First Community Bancshares’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Firstmerit Corp N/A N/A N/A $1.32 16.37
First Community Bancshares $107.58 million 4.14 $25.36 million $1.49 17.55

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

Risk & Volatility

Firstmerit Corp has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500. Comparatively, First Community Bancshares has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500.

Institutional & Insider Ownership

40.3% of First Community Bancshares shares are held by institutional investors. 3.3% of First Community Bancshares shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Firstmerit Corp and First Community Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Firstmerit Corp 23.21% 7.73% 0.90%
First Community Bancshares 21.56% 7.38% 1.05%

Analyst Recommendations

This is a summary of recent ratings and price targets for Firstmerit Corp and First Community Bancshares, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Firstmerit Corp 0 0 0 0 N/A
First Community Bancshares 0 2 0 0 2.00

First Community Bancshares has a consensus price target of $23.50, indicating a potential downside of 10.13%. Given First Community Bancshares’ higher possible upside, analysts clearly believe First Community Bancshares is more favorable than Firstmerit Corp.

Dividends

Firstmerit Corp pays an annual dividend of $0.68 per share and has a dividend yield of 3.1%. First Community Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 2.8%. Firstmerit Corp pays out 51.5% of its earnings in the form of a dividend. First Community Bancshares pays out 48.3% 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.

Summary

First Community Bancshares beats Firstmerit Corp on 7 of the 11 factors compared between the two stocks.

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.

First Community Bancshares Company Profile

First Community Bancshares, Inc. is a financial holding company. The Company provides commercial banking products and services through its subsidiary First Community Bank (the Bank). The Bank operates as First Community Bank in Virginia, West Virginia, and North Carolina and People’s Community Bank, a Division of First Community Bank, in Tennessee. It provides insurance services through its subsidiary First Community Insurance Services, and offers wealth management and investment advice through its Trust Division and subsidiary First Community Wealth Management. Its products include demand deposit accounts, savings and money market accounts, certificates of deposit, and individual retirement arrangements; commercial, consumer, and real estate mortgage loans and lines of credit; various credit card, debit card, and automated teller machine card services; corporate and personal trust services; investment management services, and life, health, and property and casualty insurance products.

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