First Merchants (NASDAQ:FRME) and Camden National (NASDAQ:CAC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.

Risk & Volatility

First Merchants has a beta of 0.98, meaning that its stock price is 2% less volatile than the S&P 500. Comparatively, Camden National has a beta of 0.8, meaning that its stock price is 20% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
First Merchants 32.85% 11.74% 1.64%
Camden National 28.00% 12.93% 1.27%

Earnings and Valuation

This table compares First Merchants and Camden National’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
First Merchants $484.40 million 4.03 $159.14 million $3.22 12.19
Camden National $189.55 million 3.59 $53.07 million $3.39 12.87

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

Insider and Institutional Ownership

71.9% of First Merchants shares are owned by institutional investors. Comparatively, 66.8% of Camden National shares are owned by institutional investors. 1.3% of First Merchants shares are owned by insiders. Comparatively, 2.0% of Camden National shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

First Merchants pays an annual dividend of $0.88 per share and has a dividend yield of 2.2%. Camden National pays an annual dividend of $1.20 per share and has a dividend yield of 2.7%. First Merchants pays out 27.3% of its earnings in the form of a dividend. Camden National pays out 35.4% 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. First Merchants has increased its dividend for 7 consecutive years and Camden National has increased its dividend for 6 consecutive years.

Analyst Ratings

This is a summary of recent recommendations for First Merchants and Camden National, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
First Merchants 0 2 1 0 2.33
Camden National 0 0 1 0 3.00

First Merchants currently has a consensus target price of $47.00, suggesting a potential upside of 19.78%. Camden National has a consensus target price of $51.50, suggesting a potential upside of 18.01%. Given First Merchants’ higher probable upside, equities analysts plainly believe First Merchants is more favorable than Camden National.

Summary

First Merchants beats Camden National 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. It accepts time, savings, and demand deposits; and provides consumer, commercial, agri-business, and real estate mortgage loans, as well as rents safe deposit facilities. The company also provides personal and corporate trust, full-service brokerage, corporate, letters of credit, and repurchase agreements services. It operates 119 banking locations in 31 Indiana, 2 Illinois, and 2 Ohio counties. The company's delivery channels include ATMs, check cards, remote deposit capture, interactive voice response systems, and Internet technology. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.

About Camden National

Camden National Corporation operates as the holding company for Camden National Bank that provides commercial and consumer banking products and services to consumer, institutional, municipal, non-profit, and commercial customers. It offers various deposit products, including demand, checking, saving, and money market accounts; and time deposits. The company also originates single family and multi-family residential loans, commercial real estate loans, municipal loans, and various consumer loans, as well as loans for the construction of residential homes, multi-family properties, and commercial real estate properties; and commercial lending to the small business medical field, including dentists, optometrists, and veterinarians. As of January 30, 2018, it operated a network of 60 banking centers, 76 ATMs, and lending offices in New Hampshire and Massachusetts. In addition, the company provides brokerage and insurance services through its financial offerings consisting of college, retirement, estate planning, mutual funds, strategic asset management accounts, and variable and fixed annuities. Further, Camden National Corporation offers a range of investment management, financial planning, fiduciary, asset management, and wealth management services, as well as serves as trustee. The company was founded in 1875 and is headquartered in Camden, Maine.

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