Are Investors Undervaluing Mercantile Bank (MBWM) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company to watch right now is Mercantile Bank (MBWM). MBWM is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 6.91, while its industry has an average P/E of 8.26. Over the last 12 months, MBWM's Forward P/E has been as high as 9.36 and as low as 5.76, with a median of 7.65.
We should also highlight that MBWM has a P/B ratio of 0.96. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. MBWM's current P/B looks attractive when compared to its industry's average P/B of 1.55. Over the past year, MBWM's P/B has been as high as 1.37 and as low as 0.82, with a median of 1.21.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MBWM has a P/S ratio of 1.87. This compares to its industry's average P/S of 1.9.
Finally, investors will want to recognize that MBWM has a P/CF ratio of 5.41. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. MBWM's P/CF compares to its industry's average P/CF of 9.16. Within the past 12 months, MBWM's P/CF has been as high as 9.13 and as low as 4.61, with a median of 7.53.
Investors could also keep in mind First Western Financial (MYFW), an Banks - Midwest stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Additionally, First Western Financial has a P/B ratio of 0.74 while its industry's price-to-book ratio sits at 1.55. For MYFW, this valuation metric has been as high as 1.23, as low as 0.57, with a median of 1.06 over the past year.
These are just a handful of the figures considered in Mercantile Bank and First Western Financial's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MBWM and MYFW is an impressive value stock right now.
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Mercantile Bank Corporation (MBWM) : Free Stock Analysis Report
First Western Financial, Inc. (MYFW) : Free Stock Analysis Report
