Stock fact sheet · data as of
First Merchants Corporation (FRME): fair value, margin of safety and Wheel Score
Ticker symbol FRME · Financial Services · Banks - Regional · United States · Value
Is FRME undervalued?
First Merchants Corporation (FRME) closed at 41.89 on 5 Nov 2026. The GLS average fair value - the simple average of the 9 valuation models that produced a positive number - is 71.06, which puts the price 41% 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 156.07. 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.
Ranked against every other company we cover, FRME is clearly cheaper than it is fast-growing, so the nightly engine files it under Value (value score 67, growth score 33, out of 100).
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 | 48.65 | +16% | Present value of the projected free cash flows, discounted at the cost of capital |
| Graham Number | 54.84 | +31% | The most a defensive investor pays for the earnings and book value per share |
| Graham Growth | 156.07 | +273% | Graham's growth formula: EPS × (8.5 + 2 × growth), adjusted for bond yields |
| Lynch | 66.36 | +58% | EPS × the earnings growth rate (PEG of 1), growth capped at 25% |
| GLS Growth | 33.73 | -19% | EPS compounded ten years at the blended growth rate, discounted back at 15% a year |
| 10 Cap | 105.13 | +151% | Owner's earnings (operating cash flow less maintenance capex) capitalised at 10% |
| Payback Time | 118.09 | +182% | Eight years of compounded free cash flow: the price at which the business pays for itself |
| DDM | 21.48 | -49% | Dividend discount model: next year's dividend ÷ (10% − 3% growth); needs a dividend |
| EPV | 35.16 | -16% | Earnings power value: current EPS capitalised at 9% with no growth |
| Zombie (liquidation) | -238.90 | -670% | Current assets less all liabilities, per share: the balance-sheet floor. Not in the average |
| Wall St target | 46.00 | +10% | Analysts' average 12-month price target. Not in the average |
Quality and financial health
Financial health is average - FRME passes 6 of the nine Piotroski tests, which passes the "Piotroski 6 or more" Wheel Trade Filter. The Financials tab on the Quote page shows which tests fail. The GLS Moat score is 7.2 out of 10: a record that is solid on some of the four parts the score weighs (returns on capital, pricing power, lasting growth, balance sheet) and weaker on 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 11.6%.
The dividend yield is 3.49% at a payout ratio of 47%; 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 37%, Deposit Account 36%, Credit Card 21% (quarter Q3 FY2026).
Institutional ownership scores 9/10, insider activity 1/10 and Congressional trading 5/10 on the GLS smart-money scales.
| Piotroski F-score | 6 / 9 | ROIC | 6.5% |
|---|---|---|---|
| GLS Moat | 7.2 / 10 | ROE | 9.2% |
| Debt / equity | 0.41 | ROA | 1.2% |
| Free-cash-flow yield | 11.6% | Payout ratio | 47% |
| Institutions | 9 / 10 | Insiders · Congress | 1 · 5 / 10 |
Wheel Score 50: Fair
FRME scores 50 out of 100 on the Wheel Score (Fair band, 50-69) because it fails filter 1, options that actually trade - options too quiet (95 open interest, 321 a day). A stock must pass all 9 Wheel Trade Filters to reach 70. Otherwise the parts read: value strong, premium strong, moat good, health good, red flags strong, option trading weak, stability fair.
Implied volatility is 33% on the near-the-money contracts 20-60 days out: enough to pass the 25-80% Wheel Trade Filter, but under the 35-60% sweet spot the score rewards most. Chain open interest is thin - 95 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 516k shares a day on a market cap of $2.6B, with a beta of 0.90; the Stability part of the Wheel Score rates that fair.
| Filter | Wheel Trade Filter | Result | Detail |
|---|---|---|---|
| 1 | Options that actually trade | Fails | options too quiet (95 open interest, 321 a day) |
| 2 | A real business, not a gamble | Passes | Profitable over the last twelve months - not a speculative stock, fund or note |
| 3 | Below fair value | Passes | Trading below the nine-model average fair value (margin of safety above 0) |
| 4 | Financially healthy | Passes | Piotroski F-score 6 or more out of 9 (a company with no score on file passes) |
| 5 | Can repay its debt | Passes | Long-term debt repaid from 3 years of operating cash flow or less (6 for real estate and utilities; banks and insurers are not judged on it) |
| 6 | No serious red flags | Passes | Red Flags score 60 or more out of 100 (earnings, margins, debt, analysts, filings and price checked the same way for every stock) |
| 7 | A premium worth selling | Passes | Implied volatility 25-80% (enough premium, not a lottery ticket) |
| 8 | Big enough | Passes | Market cap $1 billion or more |
| 9 | Not a penny stock | Passes | Share price $5 or more |
| How it ranks | Rating | From | |
|---|---|---|---|
| Value | Strong | 41% below fair value | |
| Premium | Strong | implied volatility 33% | |
| Moat | Good | moat 7.2/10 | |
| Health | Good | Piotroski 6/9 | |
| Red Flags | Strong | Red Flags score 90/100 | |
| Option trading | Weak | 321 contracts a day, 95 open interest | |
| Stability | Fair | beta 0.90, $2.6B company |
The Wheel Score ranks ~7,400 US stocks for selling cash-secured puts and covered calls: a stock must pass all 9 Wheel Trade Filters to score 70, and the score then ranks the ones that pass; the Sunday Scan is the top 10. It is updated nightly and is not a recommendation. How the Wheel Score works · the walkthrough lesson shows how it fits into a trade, start to finish.
Upcoming events
The next earnings report is due on 25 Jan 2027, 81 days away - outside the window of a 30-45-day put sold today.
Analysts upgraded FRME 1 time in the last 30 days with no downgrades; the latest action was an upgrade by Raymond James on 6 Oct 2026.
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 |
|---|---|---|---|---|---|
| BBT Beacon Financial Corp. | 31.34 | 50.55 | +38% | 72Good | $2.6B |
| BANR Banner Corporation | 71.91 | 59.98 | -20% | 30Weak | $2.6B |
| TRMK Trustmark Corporation | 45.63 | 76.39 | +40% | 48Weak | $2.6B |
| SYBT Stock Yards Bancorp, Inc. | 81.53 | 84.45 | +3% | 38Weak | $2.5B |
| FBNC First Bancorp | 66.00 | 60.49 | -9% | 37Weak | $2.7B |
| FRMEP First Merchants Corporation | 24.92 | 57.11 | +56% | 35No options | $2.5B |
| CLBK Columbia Financial, Inc. | 11.16 | 4.37 | -156% | 20Weak | $2.5B |
| FBK FB Financial Corporation | 55.71 | 45.35 | -23% | 37Weak | $2.8B |
| BOH Bank of Hawaii Corporation | 71.20 | 97.50 | +27% | 80Good | $2.8B |
| NBTB NBT Bancorp Inc. | 54.00 | 68.58 | +21% | 41Weak | $2.8B |
| MBIN Merchants Bancorp | 53.43 | 114.03 | +53% | 52Fair | $2.5B |
| MBINL Merchants Bancorp | 23.35 | 85.98 | +73% | 33No options | $2.5B |
⚖ 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 41.89 the stock is 41% below the average fair value of 71.06 (data as of 5 Nov 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 50 out of 100 (Fair) - it fails Wheel Trade Filter 1. The Wheel Score ranks stocks for the wheel strategy - selling cash-secured puts, then covered calls if assigned - in two parts: the 9 pass/fail Wheel Trade Filters (busy options, a real business, below fair value, Piotroski 6 or more, debt it can repay, a Red Flags score of 60 or more, implied volatility of 25-80%, a $1 billion company, $5 a share) and a ranking of how strongly a stock passes on value, premium, moat, health, red flags, option trading and stability. A stock that fails any filter stays under 70; 70-84 is Good, 85 and above is Prime. The Sunday Scan is the top 10 that pass, sorted by Wheel Score.
What is the GLS fair value for FRME?
71.06 per share as of 5 Nov 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 25 Jan 2027, 81 days from the data date of 5 Nov 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 28 listed contracts with 95 open interest across all expiries and implied volatility of 33% 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.