Partners Bancorp (NASDAQ:PTRS) versus Mercantile Bank (NASDAQ:MBWM) Critical Contrast

Partners Bancorp (NASDAQ:PTRS – Get Rating) and Mercantile Bank (NASDAQ:MBWM – Get Rating) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, profitability and institutional ownership.

Dividends

Partners Bancorp pays an annual dividend of $0.16 per share and has a dividend yield of 2.9%. Mercantile Bank pays an annual dividend of $1.32 per share and has a dividend yield of 4.9%. Partners Bancorp pays out 19.3% of its earnings in the form of a dividend. Mercantile Bank pays out 29.8% 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. Partners Bancorp has raised its dividend for 1 consecutive years and Mercantile Bank has raised its dividend for 9 consecutive years. Mercantile Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current recommendations for Partners Bancorp and Mercantile Bank, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Partners Bancorp	0	0	0	0	N/A
Mercantile Bank	0	1	2	0	2.67

Mercantile Bank has a consensus price target of $39.67, indicating a potential upside of 48.18%. Given Mercantile Bank’s higher probable upside, analysts plainly believe Mercantile Bank is more favorable than Partners Bancorp.

Institutional & Insider Ownership

12.1% of Partners Bancorp shares are owned by institutional investors. Comparatively, 55.5% of Mercantile Bank shares are owned by institutional investors. 45.0% of Partners Bancorp shares are owned by company insiders. Comparatively, 3.0% of Mercantile Bank shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Partners Bancorp	20.56%	10.80%	0.92%
Mercantile Bank	29.87%	16.09%	1.42%

Risk and Volatility

Partners Bancorp has a beta of 0.38, suggesting that its share price is 62% 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.

Valuation & Earnings

This table compares Partners Bancorp 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
Partners Bancorp	$67.86 million	1.46	$13.61 million	$0.83	6.62
Mercantile Bank	$213.92 million	2.00	$61.06 million	$4.43	6.04

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

Summary

Mercantile Bank beats Partners Bancorp on 13 of the 16 factors compared between the two stocks.

About Partners Bancorp

(Get Rating)

Partners Bancorp is a bank holding company, which engages in the provision of financial services to individuals and corporate customers. It offers commercial banking operations in Maryland and Virginia. The company was founded on January 6, 1988 and is headquartered in Salisbury, MD.

About Mercantile Bank

(Get Rating)

Mercantile Bank Corp. operates as a bank holding company for Mercantile Bank of Michigan. It offers checking and savings accounts, credit and debit cards, mobile and Internet banking, business loans, mobile wallet, health savings account, and treasury management services. The company was founded on July 15, 1997 and is headquartered in Grand Rapids, MI.