Comparing Truxton (OTCMKTS:TRUX) and Mercantile Bank (NASDAQ:MBWM)

Truxton (OTCMKTS:TRUX) and Mercantile Bank (NASDAQ:MBWM) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their profitability, dividends, risk, institutional ownership, valuation, analyst recommendations and earnings.

Volatility and Risk

Truxton has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Mercantile Bank has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Truxton	0	0	0	0	N/A
Mercantile Bank	0	3	1	0	2.25

Mercantile Bank has a consensus target price of $52.00, indicating a potential upside of 23.46%. Given Mercantile Bank’s higher probable upside, analysts clearly believe Mercantile Bank is more favorable than Truxton.

Dividends

Truxton pays an annual dividend of $1.72 per share and has a dividend yield of 2.3%. Mercantile Bank pays an annual dividend of $1.44 per share and has a dividend yield of 3.4%. Truxton pays out 28.5% of its earnings in the form of a dividend. Mercantile Bank pays out 27.9% 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 13 consecutive years. Mercantile Bank is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Truxton and Mercantile Bank”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Truxton	$67.30 million	3.18	$17.54 million	$6.04	12.17
Mercantile Bank	$230.14 million	2.95	$82.22 million	$5.16	8.16

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Truxton	23.95%	N/A	N/A
Mercantile Bank	23.99%	15.52%	1.50%

Institutional & Insider Ownership

0.4% of Truxton shares are owned by institutional investors. Comparatively, 58.6% of Mercantile Bank shares are owned by institutional investors. 3.1% of Mercantile Bank shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

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

About Truxton

Truxton Corporation, through its subsidiaries, provides various banking, investment management, and trust administration services to individuals, businesses, and charitable institutions in the United States. The company offers deposit products, including demand, money market accounts, and certificates of deposit. It also provides lending products, such as residential and commercial real estate mortgages, commercial loans, construction and land development loans, commercial and industrial loans, operating lines of credit, and loans to individual. In addition, the company offers strategic and capital advisory services, business banking, and treasury management services; and insurance products. The company was formerly known as NBT Holdings Inc. and changed its name to Truxton Corporation in May 2013. Truxton Corporation was founded in 2004 and is based in Nashville, Tennessee.

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.