Analyzing First Merchants (NASDAQ:FRME) and First Western Financial (NASDAQ:MYFW)

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

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Western Financial	$101.94 million	2.40	$13.19 million	$1.35	18.63
First Merchants	$1.05 billion	2.19	$201.40 million	$3.89	10.22

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

Analyst Ratings

This is a summary of recent ratings and price targets for First Western Financial and First Merchants, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Western Financial	0	2	2	1	2.80
First Merchants	0	4	2	0	2.33

First Western Financial currently has a consensus target price of $24.33, suggesting a potential downside of 3.25%. First Merchants has a consensus target price of $47.00, suggesting a potential upside of 18.21%. Given First Merchants’ higher possible upside, analysts clearly believe First Merchants is more favorable than First Western Financial.

Institutional & Insider Ownership

60.3% of First Western Financial shares are owned by institutional investors. Comparatively, 73.9% of First Merchants shares are owned by institutional investors. 15.5% of First Western Financial shares are owned by company insiders. Comparatively, 1.4% of First Merchants shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Western Financial	7.08%	5.09%	0.43%
First Merchants	21.49%	9.68%	1.22%

Volatility & Risk

First Western Financial has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, First Merchants has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500.

Summary

First Merchants beats First Western Financial on 9 of the 14 factors compared between the two stocks.

About First Western Financial

First Western Financial, Inc., a financial holding company, provides wealth advisory, private baking, personal trust, investment management, mortgage lending, and institutional asset management services. The company operates through two segments: Wealth Management and Mortgage. The Wealth Management segment provides deposit, loan, life insurance, and trust and investment management advisory products and services. The Mortgage segment engages in soliciting, originating, and selling mortgage loans into the secondary market. It serves entrepreneurs, professionals, high net worth individuals or families, and business and philanthropic organizations. First Western Financial, Inc. was incorporated in 2002 and is headquartered in Denver, Colorado.

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.