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

Earnings & Valuation

This table compares Firstmerit Corp and MB Financial’s top-line revenue, earnings per share 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
MB Financial $928.92 million 4.03 $183.61 million $2.19 20.41

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.

Analyst Recommendations

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

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

MB Financial has a consensus target price of $47.38, suggesting a potential upside of 5.98%. Given MB Financial’s higher possible upside, analysts plainly believe MB Financial is more favorable than Firstmerit Corp.

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 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 MB Financial’s 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%
MB Financial 19.12% 7.99% 1.02%

Volatility and Risk

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

Dividends

Firstmerit Corp pays an annual dividend of $0.68 per share and has a dividend yield of 3.1%. MB Financial pays an annual dividend of $0.84 per share and has a dividend yield of 1.9%. Firstmerit Corp pays out 51.5% of its earnings in the form of a dividend. MB Financial pays out 38.4% 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

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

About Firstmerit Corp

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.

About MB Financial

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.

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