Earnings Update: Here's Why Analysts Just Lifted Their Mercantile Bank Corporation (NASDAQ:MBWM) Price Target To US$44.67

It's been a good week for Mercantile Bank Corporation (NASDAQ:MBWM) shareholders, because the company has just released its latest yearly results, and the shares gained 2.2% to US$38.68. Revenues came in 3.0% below expectations, at US$218m. Statutory earnings per share were relatively better off, with a per-share profit of US$5.13 being roughly in line with analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Mercantile Bank

After the latest results, the four analysts covering Mercantile Bank are now predicting revenues of US$224.3m in 2024. If met, this would reflect a modest 2.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to drop 12% to US$4.51 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$218.4m and earnings per share (EPS) of US$4.30 in 2024. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

It will come as no surprise to learn that the analysts have increased their price target for Mercantile Bank 5.5% to US$44.67on the back of these upgrades. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Mercantile Bank, with the most bullish analyst valuing it at US$47.00 and the most bearish at US$43.00 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Mercantile Bank's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Mercantile Bank's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 2.9% growth on an annualised basis. This is compared to a historical growth rate of 9.4% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Mercantile Bank.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Mercantile Bank's earnings potential next year. Fortunately, they also upgraded their revenue estimates, although our data indicates it is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Mercantile Bank going out to 2025, and you can see them free on our platform here..

You should always think about risks though. Case in point, we've spotted 1 warning sign for Mercantile Bank you should be aware of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.