Stock fact sheet · data as of
First Merchants Corporation (FRME): fair value, margin of safety and Wheel Score
Financial Services · Banks - Regional · United States · Value
Is FRME undervalued?
First Merchants Corporation (FRME) closed at 39.48 on 16 Oct 2026. The GLS average fair value - the simple average of the 9 valuation models that produced a positive number - is 71.94, which puts the price 45% below it. 6 of the 9 models value the shares above the current price. A gap this wide is rare in our universe of ~7,400 US stocks and is exactly what the Value part of the Wheel Score rewards; it is also where the question "why is it this cheap?" matters most.
The 9 models disagree widely: DDM gives 21.48 while Graham Growth gives 158.58. A spread that wide means the average is sensitive to which methods you trust; the model table below shows where each one lands, and the Quote page lets you switch any of them off.
The nightly engine files FRME under Value: positive earnings at a P/E of 18 or less.
Nine valuation models for FRME
Each model turns the latest filed numbers into a value per share; the GLS fair value is the simple average of the ones that produce a positive number. The last two rows are shown for reference and never enter the average. The Quote page lets you switch any model off and add your own margin of safety.
| Model | Value | vs price | What it measures |
|---|---|---|---|
| DCF | 46.81 | +19% | Present value of the projected free cash flows, discounted at the cost of capital |
| Graham Number | 53.69 | +36% | The most a defensive investor pays for the earnings and book value per share |
| Graham Growth | 158.58 | +302% | Graham's growth formula: EPS × (8.5 + 2 × growth), adjusted for bond yields |
| Lynch | 68.46 | +73% | EPS × the earnings growth rate (PEG of 1), growth capped at 25% |
| GLS Growth | 34.68 | -12% | EPS compounded ten years at the blended growth rate, discounted back at 15% a year |
| 10 Cap | 106.93 | +171% | Owner's earnings (operating cash flow less maintenance capex) capitalised at 10% |
| Payback Time | 123.84 | +214% | Eight years of compounded free cash flow: the price at which the business pays for itself |
| DDM | 21.48 | -46% | Dividend discount model: next year's dividend ÷ (10% − 3% growth); needs a dividend |
| EPV | 33.02 | -16% | Earnings power value: current EPS capitalised at 9% with no growth |
| Zombie (liquidation) | -238.43 | -704% | Current assets less all liabilities, per share: the balance-sheet floor. Not in the average |
| Wall St target | 46.00 | +17% | Analysts' average 12-month price target. Not in the average |
Quality and financial health
Financial health is average - FRME passes 5 of the nine Piotroski tests, which falls one point short of the Sunday Scan's "6 or more" rule. The Financials tab on the Quote page shows which tests fail. The GLS Moat score is 7.0 out of 10: a ten-year record that is consistent in some of the metrics the score tracks (revenue, earnings, margins, cash flow, returns on capital) and patchy in others.
Returns on capital are moderate - ROIC 6.5%, ROE 9.2%, ROA 1.2% - with debt at 0.41 times equity and a free-cash-flow yield of 12.7%.
The dividend yield is 3.70% at a payout ratio of 48%; for a wheel trader holding assigned shares the dividend adds to the covered-call premium, and the ex-dividend date is worth knowing before a call is sold. Revenue comes mainly from Fiduciary and Trust 36%, Deposit Account 35%, Credit Card 21% (quarter Q2 FY2026).
Institutional ownership scores 9/10, insider activity 1/10 and Congressional trading 5/10 on the GLS smart-money scales.
| Piotroski F-score | 5 / 9 | ROIC | 6.5% |
|---|---|---|---|
| GLS Moat | 7.0 / 10 | ROE | 9.2% |
| Debt / equity | 0.41 | ROA | 1.2% |
| Free-cash-flow yield | 12.7% | Payout ratio | 48% |
| Institutions | 9 / 10 | Insiders · Congress | 1 · 5 / 10 |
Wheel Score 79: Good
FRME scores 79 out of 100 on the Wheel Score (Good band, 65-79). The score blends the margin of safety (Value, 25/25), Piotroski health (11/20), the GLS moat (11/15), the option premium on offer (20/20) and how easily the stock trades (13/20). Health (11/20) is the part holding the score back.
Implied volatility is 41% on the near-the-money contracts 20-60 days out - inside the 35-60% range the Wheel Score pays full marks for: enough premium to be worth selling, not so much that the risk is unpaid. Chain open interest is thin - 863 contracts across every expiry - so fills at a fair price are not guaranteed; a 30-45-day put may not exist at a usable strike.
Volume runs at 340k shares a day on a market cap of $2.5B, with a beta of 0.88; the Stability part of the Wheel Score gives that 13 of 20.
| Part | Points | From | |
|---|---|---|---|
| Value | 25 / 25 | 45% margin of safety | |
| Health | 11 / 20 | Piotroski 5/9 | |
| Moat | 11 / 15 | moat 7.0/10 | |
| Premium | 20 / 20 | implied volatility 41% | |
| Stability | 13 / 20 | 340k shares/day, $2.5B cap, beta 0.88 |
The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls; it is updated nightly and is not a recommendation. The walkthrough lesson shows how the score fits into a trade, start to finish.
Upcoming events
First Merchants Corporation reports earnings on 21 Oct 2026 (after the close) - inside the 14-day window the Sunday Scan avoids, because a put sold now would carry the report's gap risk.
Earnings, dividend, IPO, split and economic calendars for the whole market, filterable to your watchlists.
Similar stocks in Banks - Regional
The 12 companies below are the closest to First Merchants Corporation by market cap within the Banks - Regional industry, each with its own fact sheet; the Compare page puts up to eight of them side by side.
| Stock | Close | Fair value | MoS | Wheel | Mkt cap |
|---|---|---|---|---|---|
| FRMEP First Merchants Corporation | 25.22 | 59.08 | +57% | 39No options | $2.5B |
| BANR Banner Corporation | 67.34 | 94.59 | +29% | 80Prime | $2.5B |
| FBNC First Bancorp | 60.33 | 52.51 | -15% | 59Fair | $2.5B |
| CUBI Customers Bancorp, Inc. | 74.35 | 205.44 | +64% | 78Good | $2.5B |
| CLBK Columbia Financial, Inc. | 10.82 | 4.99 | -117% | 64Fair | $2.4B |
| BUSE First Busey Corporation | 29.26 | 36.15 | +19% | 74Good | $2.4B |
| TRMK Trustmark Corporation | 44.13 | 74.55 | +41% | 87Prime | $2.6B |
| FBK FB Financial Corporation | 51.48 | 58.33 | +12% | 73Good | $2.6B |
| SYBT Stock Yards Bancorp, Inc. | 75.27 | 75.81 | +1% | 63Fair | $2.3B |
| NBTB NBT Bancorp Inc. | 50.71 | 70.30 | +28% | 84Prime | $2.6B |
| BBAR Banco BBVA Argentina S.A. | 12.94 | 110,792.88 | +100% | 84Prime | $2.6B |
| BOH Bank of Hawaii Corporation | 67.19 | 91.69 | +27% | 84Prime | $2.7B |
⚖ Compare FRME with 7 of them All Financial Services stocks →
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Start free See the Sunday ScanQuestions about FRME
Is FRME undervalued right now?
By the GLS models, yes: at 39.48 the stock is 45% below the average fair value of 71.94 (data as of 16 Oct 2026). Whether the discount is deserved is the question to research next.
What is the Wheel Score of FRME and what does it mean?
FRME scores 79 out of 100 (Good). The Wheel Score blends the margin of safety (25 points), Piotroski health (20), the GLS moat (15), the option premium on offer (20) and trading stability (20) into one number that ranks stocks for the wheel strategy - selling cash-secured puts, then covered calls if assigned. 80 and above is Prime, 65-79 Good, 50-64 Fair, under 50 Weak.
What is the GLS fair value for FRME?
71.94 per share as of 16 Oct 2026 - the simple average of the 9 valuation models (out of nine: DCF, Graham Number, Graham Growth, Lynch, GLS Growth, 10 Cap, Payback Time, DDM and EPV) that produced a positive value. The models run every night on the latest filings; the Quote page lets you switch any of them off and add a margin of safety of your own.
When does First Merchants Corporation report earnings next?
The next earnings report is due on 21 Oct 2026 (after the close), 5 days from the data date of 16 Oct 2026. The Calendars page lists every upcoming report with its time of day.
Does FRME have listed options, and how liquid are they?
Yes. The nightly snapshot found 94 listed contracts with 863 open interest across all expiries and implied volatility of 41% on the near-the-money contracts. The Options scanner lists the cash-secured put and covered call set-ups with premium and annualised yield worked out.