First Merchants (NASDAQ:FRME) and Meta Financial Group (NASDAQ:CASH) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their analyst recommendations, profitability, risk, institutional ownership, valuation, dividends and earnings.
Volatility & Risk
First Merchants has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Meta Financial Group has a beta of 0.93, suggesting that its stock price is 7% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent recommendations for First Merchants and Meta Financial Group, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| First Merchants | 0 | 0 | 3 | 0 | 3.00 |
| Meta Financial Group | 0 | 0 | 3 | 1 | 3.25 |
First Merchants presently has a consensus price target of $39.33, indicating a potential downside of 16.45%. Meta Financial Group has a consensus price target of $46.00, indicating a potential downside of 9.13%. Given Meta Financial Group’s stronger consensus rating and higher probable upside, analysts plainly believe Meta Financial Group is more favorable than First Merchants.
Profitability
This table compares First Merchants and Meta Financial Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| First Merchants | 30.18% | 8.95% | 1.16% |
| Meta Financial Group | 22.55% | 14.11% | 1.47% |
Dividends
First Merchants pays an annual dividend of $1.04 per share and has a dividend yield of 2.2%. Meta Financial Group pays an annual dividend of $0.20 per share and has a dividend yield of 0.4%. First Merchants pays out 38.0% of its earnings in the form of a dividend. Meta Financial Group pays out 8.2% 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 1 consecutive years and Meta Financial Group has increased its dividend for 1 consecutive years.
Insider & Institutional Ownership
68.5% of First Merchants shares are owned by institutional investors. Comparatively, 73.8% of Meta Financial Group shares are owned by institutional investors. 1.4% of First Merchants shares are owned by insiders. Comparatively, 2.4% of Meta Financial Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares First Merchants and Meta Financial Group’s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| First Merchants | $558.43 million | 4.58 | $148.60 million | $2.74 | 17.18 |
| Meta Financial Group | $532.64 million | 3.03 | $104.72 million | $2.43 | 20.83 |
First Merchants has higher revenue and earnings than Meta Financial Group. First Merchants is trading at a lower price-to-earnings ratio than Meta Financial Group, indicating that it is currently the more affordable of the two stocks.
First Merchants Company Profile
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. The company also offers personal and corporate trust; brokerage and private wealth management; and letters of credit, repurchase agreements, and other corporate services. It operates 124 banking locations in Indiana, Illinois, Ohio, and Michigan counties. The company also offers its services through electronic and mobile delivery channels. First Merchants Corporation was founded in 1893 and is headquartered in Muncie, Indiana.
Meta Financial Group Company Profile
Meta Financial Group, Inc. operates as the holding company for MetaBank that offers various banking products and services in the United States. It operates through three segments: Consumer, Commercial, and Corporate Services/Other. The company offers demand deposit accounts, savings accounts, money market savings accounts, and certificate accounts; term lending, asset based lending, factoring, lease financing, insurance premium financing, warehouse financing, and healthcare receivables loans; and consumer credit products. It also provides student loans, commercial real estate loans, residential mortgage loans, home equity and home improvement loans, and agricultural loans for the purchase of farmland, livestock, farm machinery and equipment, seed, fertilizer, and other farm-related products, as well as tax services, including taxpayer advance and electronic return originator advance loans. In addition, the company issues prepaid cards and consumer credit products; sponsors automated teller machines into various debit networks; and offers tax refund transfer and other payment industry products and services. It operates ten full-service branch and 14 non-branch offices. The company was founded in 1954 and is headquartered in Sioux Falls, South Dakota.