Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. NEW YORK (TheStreet) -- Mercantile Bank Corporation (Nasdaq:MBWM) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its solid stock price performance, notable return on equity and expanding profit margins. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- Compared to its closing price of one year ago, MBWM's share price has jumped by 56.06%, exceeding the performance of the broader market during that same time frame. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
- The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Commercial Banks industry and the overall market, MERCANTILE BANK CORP's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for MERCANTILE BANK CORP is currently very high, coming in at 83.50%. It has increased significantly from the same period last year. Regardless of the strong results of the gross profit margin, the net profit margin of 15.50% trails the industry average.
- MERCANTILE BANK CORP reported flat earnings per share in the most recent quarter. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, MERCANTILE BANK CORP turned its bottom line around by earning $4.06 versus -$1.72 in the prior year. For the next year, the market is expecting a contraction of 69.0% in earnings ($1.26 versus $4.06).
- MBWM, with its decline in revenue, underperformed when compared the industry average of 14.8%. Since the same quarter one year prior, revenues fell by 10.7%. Weakness in the company's revenue seems to not be hurting the bottom line, shown by stable earnings per share.
-- Written by a member of TheStreet Ratings Staff
Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model. FREE for a limited time only: Get TheStreet Ratings #1 Stock Report NOW!.
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