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"We rate MERCANTILE BANK CORP (MBWM) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, increase in net income, good cash flow from operations and expanding profit margins. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
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Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MBWM's very impressive revenue growth greatly exceeded the industry average of 1.7%. Since the same quarter one year prior, revenues leaped by 94.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- 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 72.2% when compared to the same quarter one year prior, rising from $3.45 million to $5.95 million.
- Net operating cash flow has significantly increased by 53.86% to $8.49 million when compared to the same quarter last year. In addition, MERCANTILE BANK CORP has also vastly surpassed the industry average cash flow growth rate of -60.70%.
- The gross profit margin for MERCANTILE BANK CORP is currently very high, coming in at 92.10%. Regardless of MBWM's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 18.70% trails the industry average.
- MERCANTILE BANK CORP's earnings per share declined by 12.5% in the most recent quarter compared to the same quarter a year ago. 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 increased its bottom line by earning $1.95 versus $1.29 in the prior year. For the next year, the market is expecting a contraction of 32.8% in earnings ($1.31 versus $1.95).
- You can view the full analysis from the report here: MBWM Ratings Report