Analyzing Southside Bancshares (NASDAQ:SBSI) and Mercantile Bank (NASDAQ:MBWM)

Southside Bancshares (NASDAQ:SBSIGet Free Report) and Mercantile Bank (NASDAQ:MBWMGet Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, earnings, valuation, profitability, dividends, risk and analyst recommendations.

Volatility & Risk

Southside Bancshares has a beta of 0.54, suggesting that its share price is 46% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.

Profitability

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

Net Margins Return on Equity Return on Assets
Southside Bancshares 19.79% 10.80% 1.02%
Mercantile Bank 25.58% 16.39% 1.56%

Dividends

Southside Bancshares pays an annual dividend of $1.44 per share and has a dividend yield of 5.5%. Mercantile Bank pays an annual dividend of $1.40 per share and has a dividend yield of 3.8%. Southside Bancshares pays out 53.5% of its earnings in the form of a dividend. Mercantile Bank pays out 27.1% 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. Southside Bancshares has increased its dividend for 1 consecutive years and Mercantile Bank has increased its dividend for 13 consecutive years.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Southside Bancshares and Mercantile Bank, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Southside Bancshares 0 1 0 0 2.00
Mercantile Bank 0 2 1 0 2.33

Southside Bancshares presently has a consensus price target of $32.67, indicating a potential upside of 24.40%. Mercantile Bank has a consensus price target of $47.00, indicating a potential upside of 29.12%. Given Mercantile Bank’s stronger consensus rating and higher possible upside, analysts clearly believe Mercantile Bank is more favorable than Southside Bancshares.

Insider & Institutional Ownership

55.7% of Southside Bancshares shares are held by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are held by institutional investors. 5.9% of Southside Bancshares shares are held by insiders. Comparatively, 3.1% of Mercantile Bank shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Southside 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
Southside Bancshares $395.58 million 2.01 $86.69 million $2.69 9.76
Mercantile Bank $303.50 million 1.93 $82.22 million $5.16 7.05

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

Summary

Mercantile Bank beats Southside Bancshares on 11 of the 17 factors compared between the two stocks.

About Southside Bancshares

(Get Free Report)

Southside Bancshares, Inc. operates as the bank holding company for Southside Bank that provides a range of financial services to individuals, businesses, municipal entities, and nonprofit organizations. Its deposit products include savings, money market, and interest and noninterest bearing checking accounts, as well as certificates of deposits. The company's loan portfolio comprises consumer loans that include 1-4 family residential loans, home equity loans, home improvement loans, automobile loans, and other consumer related loans; commercial loans, such as short-term working capital loans for inventory and accounts receivable, short and medium-term loans for equipment or other business capital expansion, commercial real estate loans, and municipal loans; and construction loans for 1-4 family residential and commercial real estate. It also offers wealth management and trust services consisting of investment management, administration of irrevocable, revocable, and testamentary trusts, estate administration, and custodian services for individuals, partnerships, and corporations; safe deposit services; and brokerage services. In addition, the company provides retirement and employee benefit accounts, including plans and profit sharing plans; and telephone, internet, and mobile banking services. The company offers various banking services through branches, drive-thru facilities, automated teller machines, and interactive teller machines. Southside Bancshares, Inc. was founded in 1960 and is headquartered in Tyler, Texas.

About Mercantile Bank

(Get Free Report)

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.

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