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Mercantile Bank Corporation (MBWM)

Company Dividend Discount ModelIndustry: Banks - RegionalSector: Financial Services

Valuation Snapshot

Stable Growth$123.88 - $328.62$189.43
Multi-Stage$85.08 - $92.94$88.93
Blended Fair Value$139.18
Current Price$45.00
Upside209.29%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS5.61%-0.85%1.391.301.211.141.111.061.700.741.160.59
YoY Growth--6.99%7.15%5.82%3.31%4.80%-37.79%128.29%-35.69%96.84%-61.10%
Dividend Yield--3.19%3.46%3.96%3.23%3.41%4.99%5.12%2.24%3.36%2.62%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)85.54
(-) Cash Dividends Paid (M)23.21
(=) Cash Retained (M)62.33
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)17.1110.696.42
Cash Retained (M)62.3362.3362.33
(-) Cash Required (M)-17.11-10.69-6.42
(=) Excess Retained (M)45.2251.6355.91
(/) Shares Outstanding (M)16.2016.2016.20
(=) Excess Retained per Share2.793.193.45
LTM Dividend per Share1.431.431.43
(+) Excess Retained per Share2.793.193.45
(=) Adjusted Dividend4.224.624.88
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Fair Value$123.88$189.43$328.62
Upside / Downside175.29%320.95%630.27%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)85.5491.1097.02103.33110.04117.20120.71
Payout Ratio27.14%39.71%52.28%64.85%77.43%90.00%92.50%
Projected Dividends (M)23.2136.1850.7267.0185.20105.48111.66

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.10%9.10%9.10%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)32.8533.1633.47
Year 2 PV (M)41.8242.6243.42
Year 3 PV (M)50.1751.6153.07
Year 4 PV (M)57.9260.1462.43
Year 5 PV (M)65.1068.2471.51
PV of Terminal Value (M)1,130.141,184.731,241.41
Equity Value (M)1,378.001,440.501,505.32
Shares Outstanding (M)16.2016.2016.20
Fair Value$85.08$88.93$92.94
Upside / Downside89.06%97.63%106.52%

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