Analyzing Huntington Bancshares (NASDAQ:HBAN) and Mercantile Bank (NASDAQ:MBWM)

Huntington Bancshares (NASDAQ:HBAN) and Mercantile Bank (NASDAQ:MBWM) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, institutional ownership, valuation, profitability, analyst recommendations, earnings and dividends.

Insider & Institutional Ownership

80.7% of Huntington Bancshares shares are held by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are held by institutional investors. 0.9% of Huntington Bancshares shares are held by insiders. Comparatively, 3.2% of Mercantile Bank shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Huntington Bancshares and Mercantile Bank”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Huntington Bancshares	$11.96 billion	1.96	$1.94 billion	$1.43	11.24
Mercantile Bank	$361.89 million	2.05	$79.59 million	$5.28	8.63

Huntington Bancshares has higher revenue and earnings than Mercantile Bank. Mercantile Bank is trading at a lower price-to-earnings ratio than Huntington Bancshares, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Huntington Bancshares has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Dividends

Huntington Bancshares pays an annual dividend of $0.62 per share and has a dividend yield of 3.9%. Mercantile Bank pays an annual dividend of $1.52 per share and has a dividend yield of 3.3%. Huntington Bancshares pays out 43.4% of its earnings in the form of a dividend. Mercantile Bank pays out 28.8% 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 raised its dividend for 14 consecutive years.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Huntington Bancshares and Mercantile Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Huntington Bancshares	1	3	15	2	2.86
Mercantile Bank	0	2	4	0	2.67

Huntington Bancshares currently has a consensus target price of $19.76, indicating a potential upside of 22.98%. Mercantile Bank has a consensus target price of $54.50, indicating a potential upside of 19.62%. Given Huntington Bancshares’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Huntington Bancshares is more favorable than Mercantile Bank.

Profitability

This table compares Huntington Bancshares and Mercantile Bank’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Huntington Bancshares	18.06%	12.14%	1.09%
Mercantile Bank	23.05%	14.07%	1.40%

Summary

Huntington Bancshares beats Mercantile Bank on 10 of the 18 factors compared between the two stocks.

About Huntington Bancshares

Huntington Bancshares Incorporated operates as the bank holding company for The Huntington National Bank that provides commercial, consumer, and mortgage banking services in the United States. The company offers financial products and services to consumer and business customers, including deposits, lending, payments, mortgage banking, dealer financing, investment management, trust, brokerage, insurance, and other financial products and services. It also provides 24-hour grace, asterisk-free checking, money scout, $50 safety zone, standby cash, early pay, instant access, savings goal getter, and Huntington heads up; digitally powered consumer and business financial solutions to consumer lending, regional banking, branch banking, and wealth management customers; direct and indirect consumer loans, as well as dealer finance loans and deposits; and private banking, wealth management and legacy planning through investment and portfolio management, fiduciary administration and trust, institutional custody, and full-service retail brokerage investment services. The company offers equipment financing, asset-based lending, distribution finance, structured lending, and municipal financing solutions, as well as Huntington ChoicePay. In addition, it offers lending, liquidity, treasury management and other payment services, and capital markets; government and non-profits, healthcare, technology and telecommunications, franchises, financial sponsors, and global services; and corporate risk management, institutional sales and trading, debt and equity issuance, and additional advisory services. The company offers its products through a network of channels, including branches and ATMs, online and mobile banking, and through customer call centers to customers in middle market banking, corporate, specialty, and government banking, asset finance, commercial real estate banking, and capital markets. The company was founded in 1866 and is headquartered in Columbus, Ohio.

About Mercantile Bank

Mercantile Bank Corporation operates as the bank holding company for Mercantile Bank of Michigan that provides commercial and retail banking services to 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 provides commercial and industrial loans; vacant land, land development, and residential construction loans; owner and non-owner occupied real estate loans; multi-family and residential rental property loans; single-family residential real estate loans; home equity line of credit programs; and consumer loans, such as new and used automobile and boat loans, and credit cards, as well as overdraft protection services; and residential mortgage and instalment loans. In addition, it offers courier services and safe deposit facilities; 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. The company was incorporated in 1997 and is headquartered in Grand Rapids, Michigan.