First Merchants (NASDAQ:FRME – Get Free Report) and Chester Bancorp (OTCMKTS:CNBA – Get Free Report) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, earnings, dividends, analyst recommendations, risk, profitability and institutional ownership.
Volatility and Risk
First Merchants has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Chester Bancorp has a beta of -0.51, meaning that its share price is 151% less volatile than the S&P 500.
Institutional and Insider Ownership
73.9% of First Merchants shares are owned by institutional investors. 1.8% of First Merchants shares are owned by insiders. Comparatively, 38.8% of Chester Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Profitability
| Net Margins | Return on Equity | Return on Assets | |
| First Merchants | 18.87% | 9.58% | 1.21% |
| Chester Bancorp | N/A | N/A | N/A |
Dividends
First Merchants pays an annual dividend of $1.44 per share and has a dividend yield of 3.6%. Chester Bancorp pays an annual dividend of $0.80 per share and has a dividend yield of 12.8%. First Merchants pays out 42.4% of its earnings in the form of a dividend. First Merchants has raised its dividend for 13 consecutive years.
Earnings & Valuation
This table compares First Merchants and Chester Bancorp”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| First Merchants | $1.05 billion | 2.38 | $226.00 million | $3.40 | 11.70 |
| Chester Bancorp | N/A | N/A | N/A | N/A | N/A |
First Merchants has higher revenue and earnings than Chester Bancorp.
Analyst Recommendations
This is a breakdown of current ratings and target prices for First Merchants and Chester Bancorp, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| First Merchants | 0 | 3 | 3 | 0 | 2.50 |
| Chester Bancorp | 0 | 0 | 0 | 0 | 0.00 |
First Merchants presently has a consensus price target of $48.33, suggesting a potential upside of 21.53%. Given First Merchants’ stronger consensus rating and higher possible upside, analysts plainly believe First Merchants is more favorable than Chester Bancorp.
Summary
First Merchants beats Chester Bancorp on 10 of the 13 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 Chester Bancorp
Chester Bancorp, Inc. operates as the holding company for Chester National Bank that provides various banking products and services to individuals and businesses in Chester, Illinois. It offers checking accounts, such as regular checking, student checking, golden checking, and club checking accounts; savings accounts, including statement savings, Christmas club, and money market accounts; and certificate of deposits and individual retirement accounts. The company also provides loans comprising mortgage, construction, lot, home equity, consumer, and business loans; and reorder check services. It operates two full service offices in Sparta, Illinois; and Perryville, Missouri. Chester Bancorp, Inc. was founded in 1996 and is based in Chester, Illinois.
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