Mercantile Bank (NASDAQ: MBWM) and Pacific Premier Bancorp (NASDAQ:PPBI) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, risk, valuation, profitability and institutional ownership.
This table compares Mercantile Bank and Pacific Premier Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pacific Premier Bancorp||19.96%||8.65%||1.26%|
Volatility and Risk
Mercantile Bank has a beta of 0.66, meaning that its share price is 34% less volatile than the S&P 500. Comparatively, Pacific Premier Bancorp has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.
Insider and Institutional Ownership
52.6% of Mercantile Bank shares are held by institutional investors. Comparatively, 79.3% of Pacific Premier Bancorp shares are held by institutional investors. 3.2% of Mercantile Bank shares are held by company insiders. Comparatively, 4.6% of Pacific Premier Bancorp shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Mercantile Bank and Pacific Premier Bancorp’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Mercantile Bank||$144.54 million||3.93||$31.27 million||$1.90||18.01|
|Pacific Premier Bancorp||$301.12 million||6.53||$60.10 million||$1.55||27.42|
Pacific Premier Bancorp has higher revenue and earnings than Mercantile Bank. Mercantile Bank is trading at a lower price-to-earnings ratio than Pacific Premier Bancorp, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and recommmendations for Mercantile Bank and Pacific Premier Bancorp, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pacific Premier Bancorp||0||1||3||0||2.75|
Mercantile Bank presently has a consensus price target of $36.63, indicating a potential upside of 7.03%. Pacific Premier Bancorp has a consensus price target of $46.50, indicating a potential upside of 9.41%. Given Pacific Premier Bancorp’s stronger consensus rating and higher possible upside, analysts plainly believe Pacific Premier Bancorp is more favorable than Mercantile Bank.
Mercantile Bank pays an annual dividend of $0.76 per share and has a dividend yield of 2.2%. Pacific Premier Bancorp does not pay a dividend. Mercantile Bank pays out 40.0% of its earnings in the form of a dividend.
Pacific Premier Bancorp beats Mercantile Bank on 12 of the 16 factors compared between the two stocks.
Mercantile Bank 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.
Pacific Premier Bancorp Company Profile
Pacific Premier Bancorp, Inc. is a bank holding company. The Company’s subsidiary, Pacific Premier Bank (the Bank), is a California state-chartered commercial bank. The Company’s principal business is attracting deposits from small and middle market businesses and consumers and investing those deposits together with funds generated from operations and borrowings, primarily in commercial business loans and various types of commercial real estate (CRE) loans. The Company provides banking services within its targeted markets in California to businesses, including the owners and employees of those businesses, professionals, real estate investors and non-profit organizations. Additionally, it provides certain banking services nationwide. It also provides customized cash management, electronic banking services and credit facilities to Home Owners Associations (HOA) and HOA management companies nationwide. It provides the United States Small Business Administration (SBA) loans nationwide.
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