First Merchants (NASDAQ:FRME) vs. Lakeland Financial (NASDAQ:LKFN) Financial Survey

First Merchants (NASDAQ:FRME) and Lakeland Financial (NASDAQ:LKFN) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, dividends, profitability, analyst recommendations, valuation, risk and institutional ownership.

Insider & Institutional Ownership

73.9% of First Merchants shares are owned by institutional investors. Comparatively, 81.2% of Lakeland Financial shares are owned by institutional investors. 1.4% of First Merchants shares are owned by insiders. Comparatively, 3.0% of Lakeland Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Dividends

First Merchants pays an annual dividend of $1.44 per share and has a dividend yield of 3.5%. Lakeland Financial pays an annual dividend of $2.08 per share and has a dividend yield of 3.4%. First Merchants pays out 37.0% of its earnings in the form of a dividend. Lakeland Financial pays out 51.9% 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 13 consecutive years and Lakeland Financial has increased its dividend for 14 consecutive years. First Merchants is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk and Volatility

First Merchants has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Lakeland Financial has a beta of 0.72, suggesting that its share price is 28% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for First Merchants and Lakeland Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
First Merchants	0	3	3	0	2.50
Lakeland Financial	0	3	1	0	2.25

First Merchants currently has a consensus price target of $48.33, indicating a potential upside of 17.69%. Lakeland Financial has a consensus price target of $68.00, indicating a potential upside of 11.70%. Given First Merchants’ stronger consensus rating and higher possible upside, analysts clearly believe First Merchants is more favorable than Lakeland Financial.

Profitability

This table compares First Merchants and Lakeland 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%
Lakeland Financial	24.51%	14.19%	1.49%

Earnings & Valuation

This table compares First Merchants and Lakeland Financial”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	2.47	$226.00 million	$3.89	10.56
Lakeland Financial	$421.71 million	3.65	$103.36 million	$4.01	15.18

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

Summary

Lakeland Financial beats First Merchants on 9 of the 17 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 Lakeland Financial

Lakeland Financial Corporation operates as the bank holding company for Lake City Bank that provides various banking products and services in the United States. The company accepts various deposit products, such as noninterest bearing, interest-bearing checking, savings, money market, NOW, and demand deposits. Its loan products include commercial and industrial, commercial real estate and multi-family residential, construction, agri-business and agricultural, consumer 1-4 family mortgage, and other commercial and consumer loans. The company also provides retail and merchant credit card services; corporate treasury management, wealth advisory, and trust services; retail brokerage services, including various financial and investment products, such as annuities and life insurance; and mobile business banking and on-line treasury management services. It serves commercial real estate, manufacturing, agriculture, construction, retail, wholesale, finance and insurance, accommodation and food services, and health care industries. The company was founded in 1872 and is headquartered in Warsaw, Indiana.