Financial Contrast: Mercantile Bank (NASDAQ:MBWM) vs. Truist Financial (NYSE:TFC)

Truist Financial (NYSE:TFC) and Mercantile Bank (NASDAQ:MBWM) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, profitability, dividends, earnings and analyst recommendations.

Valuation and Earnings

This table compares Truist Financial and Mercantile Bank”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Truist Financial	$30.44 billion	2.07	$5.31 billion	$4.36	11.85
Mercantile Bank	$371.80 million	2.89	$88.75 million	$5.68	10.94

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

Institutional & Insider Ownership

71.3% of Truist Financial shares are held by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are held by institutional investors. 0.2% of Truist Financial shares are held by insiders. Comparatively, 2.5% of Mercantile Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility & Risk

Truist Financial has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500.

Dividends

Truist Financial pays an annual dividend of $2.08 per share and has a dividend yield of 4.0%. Mercantile Bank pays an annual dividend of $1.60 per share and has a dividend yield of 2.6%. Truist Financial pays out 47.7% of its earnings in the form of a dividend. Mercantile Bank pays out 28.2% 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 Ratings

This is a summary of current ratings and target prices for Truist Financial and Mercantile Bank, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Truist Financial	2	8	7	0	2.29
Mercantile Bank	0	4	3	0	2.43

Truist Financial currently has a consensus price target of $55.12, suggesting a potential upside of 6.65%. Mercantile Bank has a consensus price target of $62.00, suggesting a potential downside of 0.23%. Given Truist Financial’s higher possible upside, equities analysts plainly believe Truist Financial is more favorable than Mercantile Bank.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Truist Financial	19.13%	10.06%	1.09%
Mercantile Bank	24.75%	13.66%	1.46%

Summary

Mercantile Bank beats Truist Financial on 9 of the 17 factors compared between the two stocks.

About Truist Financial

Truist Financial Corporation, a financial services company, provides banking and trust services in the Southeastern and Mid-Atlantic United States. The company operates through three segments: Consumer Banking and Wealth, Corporate and Commercial Banking, and Insurance Holdings.Its deposit products include noninterest-bearing checking, interest-bearing checking, savings, and money market deposit accounts, as well as certificates of deposit and individual retirement accounts. The company also provides funding; asset management; automobile lending; credit card lending; consumer finance; home equity and mortgage lending; other direct retail lending; insurance; investment brokerage; mobile/online banking; payment solutions; point-of-sale lending; retail and small business deposit products; small business lending; and wealth management/private banking services. In addition, it offers asset based lending, investment banking and capital market, institutional trust, insurance premium finance, derivatives, commercial lending, international banking, leasing, merchant, commercial deposit and treasury, floor plan, mortgage warehouse lending, real estate lending, and supply chain financing services. Further, the company provides insurance brokerage, retail and wholesale brokerage, securities underwriting and market making, loan syndication, and investment management and advisory services. The company was formerly known as BB&T Corporation and changed its name to Truist Financial Corporation in December 2019. Truist Financial Corporation was founded in 1872 and is headquartered in Charlotte, North Carolina.

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.