NEW YORK (
) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its solid stock price performance, compelling growth in net income and notable return on equity. However, as a counter to these strengths, we find that we feel that the company's cash flow from its operations has been weak overall.
Highlights from the ratings report include:
- Powered by its strong earnings growth of 643.54% and other important driving factors, this stock has surged by 42.97% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 712.2% when compared to the same quarter one year prior, rising from -$4.95 million to $30.32 million.
- MBWM, with its decline in revenue, underperformed when compared the industry average of 0.8%. Since the same quarter one year prior, revenues fell by 19.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- MERCANTILE BANK CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern 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 73.8% in earnings ($1.07 versus $4.06).
- Net operating cash flow has decreased to $6.86 million or 48.38% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
Mercantile Bank Corporation operates as the holding company for Mercantile Bank of Michigan that provides commercial and retail banking products and services primarily to small-to medium-sized businesses and individuals. The company has a P/E ratio of 3.5, below the average banking industry P/E ratio of 159.3 and below the S&P 500 P/E ratio of 17.7. Mercantile has a market cap of $96 million and is part of the
industry. Shares are up 45.8% year to date as of the close of trading on Wednesday.
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-- Written by a member of TheStreet Ratings Staff