Equitable Financial (OTCMKTS:EQFN) vs. First Merchants (NASDAQ:FRME) Critical Contrast

First Merchants (NASDAQ:FRME) and Equitable Financial (OTCMKTS:EQFN) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings for First Merchants and Equitable Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Merchants	0	4	2	0	2.33
Equitable Financial	0	0	0	0	0.00

First Merchants presently has a consensus target price of $47.75, indicating a potential upside of 23.29%. Given First Merchants’ stronger consensus rating and higher possible upside, analysts plainly believe First Merchants is more favorable than Equitable Financial.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
First Merchants	21.49%	9.58%	1.21%
Equitable Financial	9.70%	6.57%	0.64%

Volatility and Risk

First Merchants has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Equitable Financial has a beta of 0.08, meaning that its share price is 92% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
First Merchants	$662.95 million	3.70	$226.00 million	$3.89	9.96
Equitable Financial	$33.95 million	1.18	$3.44 million	$1.31	12.40

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

Insider and Institutional Ownership

73.9% of First Merchants shares are held by institutional investors. Comparatively, 7.2% of Equitable Financial shares are held by institutional investors. 1.4% of First Merchants shares are held by insiders. Comparatively, 11.3% of Equitable Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

First Merchants beats Equitable Financial on 12 of the 14 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 Equitable Financial

Equitable Financial Corp. operates as the holding company for Equitable Bank that provides various banking products and services in Nebraska, the United States. The company offers checking and savings accounts; recorder checks; online and mobile banking; remote deposit capture; voice banking; credit card processing; debit and gift cards; and safe deposit boxes. It also provides home, home equity, auto, personal, real estate and construction, operating lines of credit, small business administration, and agricultural loans, as well as equipment financing. In addition, the company offers foreign currency and exchanges; financial planning; wealth management; investment advisory; and retirement services. It operates through branches located in Grand Island, North Platte, and Omaha. The company was founded in 1882 and is headquartered in Grand Island, Nebraska.