Peers for FirstMerit (NASDAQ:FMER) include Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares Incorporated (NASDAQ:HBAN), KeyCorp (NYSE:KEY), and PNC Financial Services (NYSE:PNC). All four of these companies are trading at least close to FirstMerit (NASDAQ:FMER) in book value terms, with KeyCorp being the only one to feature a discount to book (its P/B ratio is 0.9). Interestingly, FirstMerit carries a small premium in terms of trailing earnings with the four other banks clustered between 10 and 12 times their trailing earnings. However, business has generally been flat at these companies recently: Fifth Third Bancorp (NASDAQ:FITB), Huntington Bancshares Incorporated (NASDAQ:HBAN), and KeyCorp (NYSE:KEY) all had both their revenue and earnings come in for their most recent quarter within 5% of their levels in the same period in the previous year, with these numbers being lower in some cases. Only PNC Financial Services (NYSE:PNC), the largest of this group by market cap at $36 billion, has done much better with net income rising 26% in Q1 compared to the first quarter of 2012; even there, revenue numbers were more modest.
Still, we think that when the lower earnings multiple is taken into account as well PNC at least is worth researching further. FirstMerit isn’t exactly expensive, and it does have the advantages of strong earnings growth and multiple insider purchases over some of its peers, but we aren’t sure that it’s actually better in value terms than PNC. We do think that the dividend yield is high for a financial, however, and with the company seeming fairly stable and certainly not too overvalued it would be worth a look on that basis.
Disclosure: I own no shares of any stocks mentioned in this article.