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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Mercantile Bank Corporation (XNAS:MBWM) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
MBWM
Name:
MERCANTILE BANK CORPORATION (XNAS:MBWM)
Sector:
27.56M
Industry:
Banks�Regional
CEO:
Mr. Robert Kaminski
Total Employees:
585
Our Technological Advancement Rating
Our Rating:
A
Technological advancement compared to industry is 218.51% higher
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF MERCANTILE BANK CORPORATION(MBWM) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND BANKS�REGIONAL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
32.98
One Month Price Target:
$33.16
Six Month Price Target :
$34.07
Likely Price in One Year's Time:
Ticker:
$35.17
Likely Trading Range Today Under (Normal Volatility)
$32.83
Price Upper limit ($) :
$33.14
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$31.12
This week:
$28.82
This month :
$24.65
Other Primary facts
Market Cap:
511.20M
Market Cap Classification:
Small Cap
Number of Shares
IPO Date:
15.86M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
17.17%
-12.69%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$41.62
$37.67
$24.34
$28.29
Medium risk (<10%) entry points
Buy Call
Sell Call
$36.39
Buy Put:
Sell Put:
$35.55
$29.56
$30.41
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
MBWM
Sharpe Ratio:
0.65%
Comparison:
MBWM, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -46.71% lower than the industry
& is -71.28% lower than the market/S&P 500 average
Average Returns/Yield of
MBWM
Daily returns:
0.03%
Weekly returns:
0.13%
Monthly returns:
0.54%
Yearly returns:
10.91%
Comparison of returns:
Average annual returns/yield (last 3 years) is -40.77% below industry average
Classification:
MBWM, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.38
Statistical test of Returns:
MBWM has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.76%
Weekly Volatility:
6.18%
Monthly Volatility:
12.35%
Yearly Volatility:
42.78%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
0.30%
Volatility in last five trading days has been -89.16% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-5.64%
Weekly VaR:
-12.62%
Monthly VaR:
-25.24%
How Much Can the price of
MBWM
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-22%
Worst case (decline):
-87.45%
This translates to price declining to:
$25.72
This translates to price declining to:
$4.14
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
MBWM is a 78.17% riskier investment compared to the market/S&P 500 & is 52.64% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -3.33% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
MBWM
Beta in relation to market/S&P 500--0.99
Expected beta in 1 year's time:
0.678
Expected beta in 3 year's time:
0.959
Unlevered (debt free) Beta:
0.506
Beta in relation to Nasdaq (XNAS):
0.496
Beta in relation to all global stocks::
0.916
Beta Comparison & Analysis
Beta of competitors/peers::
0.975
Beta is 1.15% higher than peers
Average Industry Beta:
0.964
Beta is 2.31% above industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
8.99%
Sustainable growth rate is -1.53% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.034
Alpha is -396.61% below industry average alpha yield
Alpha is -219% below the market average
Analysis of Cost of Capital of
MBWM
Equity cost of capital:
0.099
Equity cost of capital is 1.56% above industry mean WACC
Unlevered (without debt) cost of capital:
5.08%
Before-tax cost of debt:
3.69%
After-tax cost of debt:
2.92%
Overall debt rating:
Upper medium A grade (third highest grade),CO8<=0.0429,"Medium BBB grade (Fourth highest grade)
Weighted average cost of capital (WACC):
2.92%
WACC is -19.90% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$11.12
Revenue growth rate per share of (3Y):
1.2
Annual revenue growth rate is 22.64% above the industry average
EPS:
$3.54
Expected Annual growth rate of EPS (3Y):
7.03%
Expected future EPS growth rate is -41.56% lower than the Banks�Regional industry
Free cash flow (FCF) per share:
$5.53
Balance sheet equity growth per share: -28.76%
Equity growth rate per share is -174.27% lower than the industry
Debt per share
$32.73
EBITDA per share
$6.51
Valuation Analysis Today of
MBWM
P/E Ratio:
10.45
P/E Ratio of Competitors/Peers:
10.32
P/E ratio is 1.23% higher than main peers & is -15.80% lower than the industry
Stock price/value with industry average P/E ratio: $43.93
MBWM is -24.92% undervalued if valued using industry average P/E ratio
Share value as per dividend discount (DDM) model: $29.23
Present value of the expected future dividends only: $14.57
P/S (Price to Sales ratio):
2.97
Price to sales ratio is -30.66% below the industry mean
P/B (Price to book value ratio):
1.2
Price to free cash flow: 5.96
-
Net income growth rate (3Y):
48.54%
Net income growth rate is -11.86% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 8.55%
Dividend yeild: 3.70%
Previous Dividend: $0.31
Previous adjusted dividend: $0.31
Previous Dividend: $1.22
Expected next dividend best case: $0.32
Expected next dividend worst case: $0.30
Average dividend payment (long-term): $0.29
Average dividend increase/decrease (growth rate) % per period: 1.41%
Expected next dividend payment date: 13/09/2022
Expected next dividend record date: 09/01/2022
-
Previous dividend payment date: 15/06/2022
Previous dividend record date: 06/03/2022
-
Dividend History:
2022-06-02--$0.31
2021-12-02--$0.30
2021-06-03--$0.29
2022-03-03--$0.31
2021-09-02--$0.30
2021-03-04--$0.29
Dividend growth rate is -94.01% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
118.93%
Net debt to equity ratio:
-57.53%
Debt to assets ratio:
10.03%
Net debt to assets ratio:
-4.85%
Debt-to-asset ratio is -93.98% below industry average
Ability to repay debt:
Interest coverage ratio:
5.39
Interest coverage ratio is 550.01% more than industry average
Looking forward:
Debt growth rate:
12.30%
Annual debt growth is 3785% higher than industry average debt growth rate
Debt repayment rate in last quarter: 3.71%
Analysis of Key Statistics
Correlation of price movement with the market:
0.47
Statistical significance of correlation:
MBWM has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.501
Stock price is -6.15% less correlated with the market compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.501
Correlation of price movement with Nasdaq (^IXIC):
0.035
Covariance of price movement with the market:
0.057
Kurtosis
6.51
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
0.562
Returns are right (positive) skewed; mean returns are greater than median and mode returns
Fundamental Analysis & Dupont Analysis of
MBWM
Gross Profit Margin Ratio:
-
Operating Profit Margin Ratio:
0.00%
-
Net Profit Margin Ratio:
-
Effective Tax Rate:
20.13%
Effective tax rate is -6.57% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
12.89%
Return on equity (ROE) is 8.07% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
1.09%
Return on assets (ROA) is -52.82% lower than the industry
Financial Leverage:
1.1x
Current Ratio:
0
-
Cash Conversion Cycle (days):
0
-
The remaining useful life of property plant & equipment is: 4.7 years
Stock based compensation to net income ratio:
1.44%
In-depth Efficiency Analysis
Revenue generated per employee:
301.5K
Each employee generates -21% less revenue than industry average revenue per employee
EBITDA generated per employee:
176.6K
Each employee generates -22% less EBITDA than industry average revenue per employee
Profit generated per employee:
96.2K
Each employee generates -32% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
47.1K
Each employee generates -43% less free cash flow than industry average revenue per employee
Assets/Capital per employee
1.2M
Each employee generates -43% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
MBWM
THE FIRST OF LONG ISLAND CORPORATION (XNAS:FLIC)
ACTC
First Community Bankshares, Inc. (XNAS:FCBC)
FINANCIAL INSTITUTIONS, INC. (XNAS:FISI)
INDEPENDENT BANK CORPORATION (XNAS:IBCP)
TCV Acquisition Corp (XNAS:TCVA)
ATLANTIC CAPITAL BANCSHARES, INC. (XNAS:ACBI)
BANK FIRST CORPORATION (XNAS:BFC)
SONDER HOLDINGS INC (XNAS:SOND)
Current Analyst Ratings
Strong buy�0%
Buy�0%
Hold�25%
Sell�0%
Strong sell�0%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
3/31/22
Revenue:
176.39M
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
-
-
-
80.15M
81.33M
-
-
-
144.59M
19.18M
13.68M
103.31M
-
56.27M
70.46M
14.18M
56.27M
Statement of Cash Flow
Date:
Period:
3.46M
Differed Income Tax :
-
Stock Based Compensation :
811.00K
Change in Working Capital :
10.96M
Accounts Receivables:
- 1344.00K
Other Working Capital:
-
Other Non-Cash Items:
1.17M
Net Cash Provided by Operating Activities:
27.89M
Investments in PP&E:
- 332.00K
Net Acquisitions:
-
Purchases of Investments:
- 51705.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
3/31/22
2022
Q1
770.20M
605.66M
1.38B
-
-
-
-
56.08M
49.47M
1.11M
605.66M
-
-
712.32M
5.89B
5.18B
39.80M
-
-
-
-
-
519.11M
-
519.11M
5.26B
4.74B
286.83M
181.53M
- 31892.0K
-
March 31, 2022 at 6:00:00 AM
-
436.47M
5.18B
1.21B
519.11M
- 251098.0K
2.85M
- 101947.00K
- 151130.00K
- 20000.00K
222.00K
-
- 4812.00K
- 57124.00K
- 81714.00K
-
- 204956.00K
770.20M
975.16M
27.89M
- 332.00K
27.56M
Our Proprietary Portfolio Rating
Our Rating:
A+
Price Forecast/Expected Price in Next 5 Years of
MBWM
2023
2024
2025
2026
2027
$41.65
$44.41
$47.35
$50.49
$53.84