Reviewing German American Bancorp (NASDAQ:GABC) & First Merchants (NASDAQ:FRME)

First Merchants (NASDAQ:FRME) and German American Bancorp (NASDAQ:GABC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, risk, profitability, earnings, institutional ownership and dividends.

Analyst Recommendations

This is a summary of current ratings and price targets for First Merchants and German American Bancorp, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Merchants	0	4	2	0	2.33
German American Bancorp	0	2	3	0	2.60

First Merchants currently has a consensus price target of $49.00, indicating a potential upside of 8.47%. German American Bancorp has a consensus price target of $47.67, indicating a potential downside of 3.28%. Given First Merchants’ higher probable upside, research analysts clearly believe First Merchants is more favorable than German American Bancorp.

Dividends

First Merchants pays an annual dividend of $1.48 per share and has a dividend yield of 3.3%. German American Bancorp pays an annual dividend of $1.24 per share and has a dividend yield of 2.5%. First Merchants pays out 43.5% of its earnings in the form of a dividend. German American Bancorp pays out 34.3% 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. First Merchants has raised its dividend for 13 consecutive years and German American Bancorp has raised its dividend for 13 consecutive years.

Institutional and Insider Ownership

73.9% of First Merchants shares are owned by institutional investors. Comparatively, 46.9% of German American Bancorp shares are owned by institutional investors. 1.8% of First Merchants shares are owned by company insiders. Comparatively, 3.2% of German American Bancorp shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares First Merchants and German American Bancorp”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Merchants	$1.05 billion	2.71	$226.00 million	$3.40	13.29
German American Bancorp	$487.40 million	3.80	$112.64 million	$3.61	13.65

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

Volatility and Risk

First Merchants has a beta of 0.84, indicating that its stock price is 16% less volatile than the S&P 500. Comparatively, German American Bancorp has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500.

Profitability

This table compares First Merchants and German American Bancorp’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
First Merchants	18.87%	9.58%	1.21%
German American Bancorp	27.09%	11.98%	1.62%

Summary

German American Bancorp beats First Merchants on 10 of the 16 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 German American Bancorp

German American Bancorp, Inc. operates as a financial holding company for German American Bank that provides retail and commercial banking services. The company operates through three segments: Core Banking, Wealth Management Services, and Insurance Operations. The Core Banking segment accepts deposits from the general public; and originates consumer, commercial and agricultural, commercial and agricultural real estate, and residential mortgage loans, as well as sells residential mortgage loans in the secondary market. The Wealth Management segment provides trust, investment advisory, brokerage, and retirement planning services. The Insurance Operations segment offers a range of personal and corporate property and casualty insurance products. It also offers checking, saving, and individual retirement accounts; certificates of deposit; wire transfer; credit cards; home equity, mortgages, and small business; treasury management; and online and mobile banking, bill pay, digital wallet, mobile check deposit, credit score and report, money management, and estatements, as well as wealth advisory. German American Bancorp, Inc. was founded in 1910 and is based in Jasper, Indiana.