J P Morgan Chase & Co (NYSE: JPM) and Firstmerit Corp (NASDAQ:FMER) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitabiliy.

Valuation & Earnings

This table compares J P Morgan Chase & Co and Firstmerit Corp’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
J P Morgan Chase & Co $92.25 billion 3.32 $23.05 billion $6.49 13.28
Firstmerit Corp N/A N/A N/A $1.32 16.37

J P Morgan Chase & Co has higher revenue and earnings than Firstmerit Corp. J P Morgan Chase & Co is trading at a lower price-to-earnings ratio than Firstmerit Corp, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

J P Morgan Chase & Co has a beta of 1.22, suggesting that its share price is 22% more volatile than the S&P 500. Comparatively, Firstmerit Corp has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.

Profitability

This table compares J P Morgan Chase & Co and Firstmerit Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
J P Morgan Chase & Co 23.82% 11.25% 1.02%
Firstmerit Corp N/A N/A N/A

Analyst Recommendations

This is a breakdown of current recommendations and price targets for J P Morgan Chase & Co and Firstmerit Corp, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
J P Morgan Chase & Co 2 12 18 0 2.50
Firstmerit Corp 0 0 0 0 N/A

J P Morgan Chase & Co presently has a consensus target price of $81.00, indicating a potential downside of 6.01%. Given J P Morgan Chase & Co’s higher probable upside, analysts plainly believe J P Morgan Chase & Co is more favorable than Firstmerit Corp.

Dividends

J P Morgan Chase & Co pays an annual dividend of $2.00 per share and has a dividend yield of 2.3%. Firstmerit Corp pays an annual dividend of $0.68 per share and has a dividend yield of 3.1%. J P Morgan Chase & Co pays out 30.8% of its earnings in the form of a dividend. Firstmerit Corp pays out 51.5% 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. J P Morgan Chase & Co has raised its dividend for 6 consecutive years.

Institutional & Insider Ownership

74.3% of J P Morgan Chase & Co shares are held by institutional investors. 0.9% of J P Morgan Chase & Co shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

J P Morgan Chase & Co beats Firstmerit Corp on 12 of the 13 factors compared between the two stocks.

J P Morgan Chase & Co Company Profile

JPMorgan Chase & Co. is a financial holding company. The Company is engaged in investment banking, financial services. It operates in four segments, as well as a Corporate segment. Its segments are Consumer & Community Banking, Corporate & Investment Bank, Commercial Banking and Asset Management. The Consumer & Community Banking segment offers services to consumers and businesses through bank branches, automatic teller machines (ATMs), online, mobile and telephone banking. The Corporate & Investment Bank segment, comprising Banking and Markets & Investor Services, offers investment banking, market-making, prime brokerage, and treasury and securities products and services to corporations, investors, financial institutions, and government and municipal entities. The Commercial Banking segment provides financial solutions, including lending, treasury services, investment banking and asset management. The Asset Management segment comprises investment and wealth management.

Firstmerit Corp Company Profile

FirstMerit Corporation is a bank holding company. The Company’s business consists of owning and supervising its affiliates. It operates through FirstMerit Bank, N.A. and its other subsidiaries, providing a range of banking, fiduciary, financial, insurance and investment services to customers throughout Ohio, the Chicago, Illinois-metropolitan area, Michigan, Wisconsin and Western Pennsylvania. Its segments include Commercial, Retail, Wealth and Other. The Commercial segment provides various lending, depository and related financial services. The Retail segment includes consumer lending and deposit gathering, residential mortgage loan origination and servicing, and branch-based small business banking. The Wealth segment offers a range of asset management, private banking, financial planning, estate settlement and administration, credit and deposit products and services. The Other segment includes activities of the parent company, community development operations and the treasury group.

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