5 Reasons to Add Mercantile Bank (MBWM) to Your Portfolio Now
It seems to be a wise idea to add Mercantile Bank Corporation’s MBWM stock to your portfolio now. Supported by strong fundamentals, it has been on track for growth.
Analysts are optimistic regarding the company’s earnings growth potential. The Zacks Consensus Estimate for MBWM’s current-year earnings has been revised marginally upward over the past week.
MBWM currently carries a Zacks Rank #2 (Buy).
Shares of Mercantile Bank have gained 7.7% over the past month compared with the industry’s 6.5% growth.
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Some other factors mentioned below make the Mercantile Bank stock a solid pick right now.
Earnings per Share (EPS) Growth: In the last three to five years, Mercantile Bank witnessed EPS growth of 13.5%, higher than the industry average of 10.1%. The upward trend will likely continue in the near term. In 2023, the company’s earnings are projected to grow 13.8%.
It has a decent earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and met once, the average surprise being 8.3%.
Revenue Strength: Mercantile Bank’s total revenues saw a compounded average growth rate (CAGR) of 7.9% from 2019 to 2022, with the increasing trend continuing in first-quarter 2023. The company’s top line is expected to keep improving in the near term, supported by high interest rates, as reflected by the projected sales growth rate of 10.6% for 2023.
Capital Deployments Impressive: Mercantile Bank continues to enhance shareholder value through efficient capital deployment activities. In January 2023, the company hiked its regular dividend by 3.1% to 33 cents.
Mercantile Bank also has a share repurchase plan in place. As of Mar 31, 2023, the company had the ability to repurchase up to $6.8 million in shares as part of its $20-million stock repurchase program announced in May 2021.
Return on Equity (ROE) Superior: The company’s ROE of 16.1% is higher than the industry average of 13.6%. This shows that it reinvests its cash more efficiently than its peers.
Valuation Favorable: The MBWM stock looks undervalued right now, with respect to its price-to-sales (P/S) and price-to-earnings (P/E) ratios. It has a P/S ratio of 1.90, below the industry average of 1.93. Moreover, its P/E (F1) ratio of 6.41 compares favorably with the industry’s 7.51. It carries a Value Score of B.
Other Finance Stocks Worth a Look
A couple of other top-ranked stocks from the finance space are First Citizens BancShares FCNCA and OFG Bancorp OFG.
The Zacks Consensus Estimate for First Citizens BancShares' current-year earnings has been revised 67.2% upward over the past 60 days. The company’s shares have gained 67.9% over the past six months. Currently, FCNCA sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
OFG flaunts a Zacks Rank #1 at present. The consensus mark for the company’s 2023 earnings has been revised 1.1% upward over the past seven days. In the past three months, OFG shares have rallied 5.4%.
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First Citizens BancShares, Inc. (FCNCA) : Free Stock Analysis Report
Mercantile Bank Corporation (MBWM) : Free Stock Analysis Report
OFG Bancorp (OFG) : Free Stock Analysis Report
