Mercantile Bank (NASDAQ: BSRR) and Sierra Bancorp (NASDAQ:BSRR) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.
Institutional & Insider Ownership
58.2% of Mercantile Bank shares are owned by institutional investors. Comparatively, 54.3% of Sierra Bancorp shares are owned by institutional investors. 3.2% of Mercantile Bank shares are owned by insiders. Comparatively, 10.2% of Sierra Bancorp shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares Mercantile Bank and Sierra Bancorp’s 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||4.17||$31.27 million||$1.89||19.21|
|Sierra Bancorp||$102.70 million||4.42||$19.53 million||$1.55||19.19|
Mercantile Bank has higher revenue and earnings than Sierra Bancorp. Sierra Bancorp is trading at a lower price-to-earnings ratio than Mercantile Bank, indicating that it is currently the more affordable of the two stocks.
This table compares Mercantile Bank and Sierra Bancorp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Volatility and Risk
Mercantile Bank has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Sierra Bancorp has a beta of 0.77, meaning that its stock price is 23% less volatile than the S&P 500.
This is a summary of recent ratings for Mercantile Bank and Sierra Bancorp, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Mercantile Bank presently has a consensus target price of $37.50, suggesting a potential upside of 3.31%. Sierra Bancorp has a consensus target price of $30.33, suggesting a potential upside of 2.00%. Given Mercantile Bank’s higher probable upside, research analysts plainly believe Mercantile Bank is more favorable than Sierra Bancorp.
Mercantile Bank pays an annual dividend of $0.88 per share and has a dividend yield of 2.4%. Sierra Bancorp pays an annual dividend of $0.64 per share and has a dividend yield of 2.2%. Mercantile Bank pays out 46.6% of its earnings in the form of a dividend. Sierra Bancorp pays out 41.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Mercantile Bank has increased its dividend for 5 consecutive years and Sierra Bancorp has increased its dividend for 5 consecutive years.
Mercantile Bank Company Profile
Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services for small- to medium-sized businesses and individuals in the United States. It accepts various deposit products, including checking, savings, and term certificate accounts; time deposits; and certificates of deposit. The company also offers commercial and industrial loans; vacant land, land development, and residential construction loans; owner occupied real estate, non-owner occupied real estate, and multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as loans for new and used automobiles, boats, and credit cards, as well as overdraft protection services. In addition, it provides courier services and safe deposit facilities; repurchase agreements; and insurance products, such as private passenger automobile, homeowners, personal inland marine, boat owners, recreational vehicle, dwelling fire, umbrella policies, small business, and life insurance products, as well as operates and 49 automated teller machines. As of January 16, 2018, the company operated 49 banking offices. Mercantile Bank Corporation was founded in 1997 and is headquartered in Grand Rapids, Michigan.
Sierra Bancorp Company Profile
Sierra Bancorp operates as the bank holding company for Bank of the Sierra that provides retail and commercial banking services to individuals and businesses in California. The company accepts various deposit products, such as checking accounts, savings accounts, money market demand accounts, time deposits, retirement accounts, and sweep accounts. Its loan products include real estate loans secured by commercial, professional office, and agricultural properties; construction loans for residential and commercial development; permanent mortgage loans, land acquisition and development loans, and multifamily credit facilities; secondary market services for residential mortgage loans; agricultural production loans; commercial and industrial loans and leases, including SBA loans and direct finance leases; mortgage warehouse loans; and consumer loans. The company also offers automated teller machines; electronic point-of-sale payment alternatives; online and automated telephone banking services; and remote deposit capture and automated payroll services for business customers. As of December 31, 2017, it operated 39 full service branches, an online branch, a real estate industries center, an agricultural credit center, and an SBA lending unit. Sierra Bancorp was founded in 1977 and is headquartered in Porterville, California.
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