Is First Merchants Corp. (Indiana) overvalued or undervalued?

As of 23 July 2025, the valuation grade for First Merchants Corp. (Indiana) moved from fair to very attractive, indicating a strong improvement in its valuation outlook. The company is currently considered undervalued, supported by a P/E ratio of 10, a Price to Book Value of 0.92, and an EV to EBITDA of 13.39. In comparison, UMB Financial Corp. has a P/E ratio of 19.64, while F.N.B. Corp. shows a P/E of 13.06, highlighting that First Merchants Corp. is trading at a significant discount relative to its peers.
Despite a strong dividend yield of 5.08% and a ROE of 8.95%, the stock has underperformed against the S&P 500 over the longer term, particularly in the 3-year and 10-year periods, where it returned -0.51% and 70.52%, respectively, compared to the S&P 500's 70.41% and 231.64%. However, in the short term, it has outperformed the S&P 500 with a 1-week return of 1.41% versus 1.05%. Overall, the valuation metrics suggest that First Merchants Corp. is positioned favorably compared to its industry peers.