Strength Seen in Mercantile Bank (MBWM): Can Its 5.8% Jump Turn into More Strength?
Mercantile Bank MBWM shares ended the last trading session 5.8% higher at $39.84. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 2.7% gain over the past four weeks.
The Federal Reserve has signaled an end to the current rate hike cycle by keeping interest rates unchanged at the 22-year high of 5.25-5.5% at the end of the two-day FOMC meeting. The central bank has also indicated a 75 basis points cut in rates by 2024-end. The above-mentioned developments have attributed to bullish investor sentiments. Given the fall in rates, the higher funding costs being faced by banks will likely come down somewhat next year, thus supporting net interest income and margins. This probably drove the MBWM stock higher, which touched a new 52-week high in last day’s trading session.
This holding company for Mercantile Bank of Michigan is expected to post quarterly earnings of $1.22 per share in its upcoming report, which represents a year-over-year change of -11%. Revenues are expected to be $56 million, down 4.2% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For Mercantile Bank, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on MBWM going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Mercantile Bank is a member of the Zacks Banks - Midwest industry. One other stock in the same industry, Old National Bancorp ONB, finished the last trading session 5.9% higher at $16.82. ONB has returned 6.8% over the past month.
For Old National Bancorp , the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.48. This represents a change of -14.3% from what the company reported a year ago. Old National Bancorp currently has a Zacks Rank of #3 (Hold).
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