MidWestOne Financial Group (NASDAQ: MOFG) and Mercantile Bank Corporation (NASDAQ:MBWM) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.
This table compares MidWestOne Financial Group and Mercantile Bank Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|MidWestOne Financial Group||17.35%||7.38%||0.79%|
|Mercantile Bank Corporation||22.18%||8.91%||1.00%|
Insider and Institutional Ownership
46.9% of MidWestOne Financial Group shares are owned by institutional investors. Comparatively, 54.7% of Mercantile Bank Corporation shares are owned by institutional investors. 25.3% of MidWestOne Financial Group shares are owned by insiders. Comparatively, 3.2% of Mercantile Bank Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
MidWestOne Financial Group pays an annual dividend of $0.68 per share and has a dividend yield of 2.0%. Mercantile Bank Corporation pays an annual dividend of $0.76 per share and has a dividend yield of 2.2%. MidWestOne Financial Group pays out 33.5% of its earnings in the form of a dividend. Mercantile Bank Corporation pays out 39.8% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.
Valuation & Earnings
This table compares MidWestOne Financial Group and Mercantile Bank Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|MidWestOne Financial Group||$135.76 million||3.07||$20.39 million||$2.03||16.83|
|Mercantile Bank Corporation||$139.49 million||4.12||$31.91 million||$1.91||18.25|
Mercantile Bank Corporation has higher revenue and earnings than MidWestOne Financial Group. MidWestOne Financial Group is trading at a lower price-to-earnings ratio than Mercantile Bank Corporation, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
MidWestOne Financial Group has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500. Comparatively, Mercantile Bank Corporation has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500.
This is a breakdown of recent ratings and recommmendations for MidWestOne Financial Group and Mercantile Bank Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|MidWestOne Financial Group||0||1||1||0||2.50|
|Mercantile Bank Corporation||0||4||0||0||2.00|
MidWestOne Financial Group presently has a consensus price target of $38.50, suggesting a potential upside of 12.70%. Mercantile Bank Corporation has a consensus price target of $33.67, suggesting a potential downside of 3.40%. Given MidWestOne Financial Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe MidWestOne Financial Group is more favorable than Mercantile Bank Corporation.
Mercantile Bank Corporation beats MidWestOne Financial Group on 9 of the 16 factors compared between the two stocks.
MidWestOne Financial Group Company Profile
MidWestOne Financial Group, Inc. is a bank holding and financial holding company. The Company operates through its bank subsidiaries, MidWestOne Bank, Central Bank and MidWestOne Insurance Services, Inc. that operates through three agencies located in central and east-central Iowa. As of December 31, 2016, the Bank operated a total of 43 banking offices in Iowa, Minnesota, Wisconsin, and Florida. It provides full service retail banking in the communities in which its branch offices are located and also offers trust and investment management services. The Bank offers deposit products, including checking and other demand deposit accounts, negotiable order of withdrawal (NOW) accounts, savings accounts, money market accounts, certificates of deposit, individual retirement accounts and other time deposits. The Bank offers commercial and industrial, agricultural, real estate mortgage and consumer loans.
Mercantile Bank Corporation Company Profile
Mercantile Bank Corporation is a bank holding company. The Company owns the Mercantile Bank of Michigan (the Bank). The Bank is a state banking company. The Bank provides commercial banking services primarily to small- to medium-sized businesses and retail banking services. The Bank makes secured and unsecured commercial, construction, mortgage and consumer loans, and accepts checking, savings and time deposits. The Bank also enables customers to conduct certain loan and deposit transactions by personal computer and through mobile applications. Courier service is provided to certain commercial customers, and safe deposit facilities are available at its office locations. The Bank’s commercial lending group originates commercial loans and leases primarily in its market areas. The Bank’s primary deposit products are checking, savings and term certificate accounts.
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