4 Reasons to Invest in Merchants Bancorp (MBIN) Stock Now
Despite the continued uncertainties related to the pandemic, it seems to be a wise idea to add Merchants Bancorp MBIN stock to your portfolio now. The company’s fundamental strength, and decent sales and earnings growth projections make it a good investment option.
Of late, earnings estimates for the company have been witnessing upward revisions, reflecting analysts’ optimism regarding its growth potential. Over the past 30 days, the Zacks Consensus Estimate for 2020 earnings has been revised 74.5% upward. Thus, the company currently sports a Zacks Rank #1 (Strong Buy).
Its price performance also seems encouraging. The stock has gained 10.2% over the past three months against the industry’s decline of 3.9%.
Mentioned below are the factors that make Merchants Bancorp a solid pick right now.
Revenue Strength: Organic growth remains a key strength for the company. Merchants Bancorp’s revenues witnessed a CAGR of 25.1% over the last five years (2015-2019), with the uptrend continuing in the first half of 2020. The top line is expected to continue to grow in the near term, as can be seen from its projected sales growth rate of 50.1% for 2020.
Earnings Growth: The company has an impressive earnings surprise history. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average beat being 69.6%.
Also, its earnings are expected to witness improvement in the near term. In 2020, earnings are projected to grow more than 47% (against the industry’s decline of 23%).
Superior Return on Equity (ROE): The company currently has an ROE of 25.60%, higher than the industry average of 8.46%. This reflects that it is more efficient than peers in using shareholder funds.
Favorable Valuation: Merchants Bancorp currently looks undervalued when compared with industry peers. It has a price/earnings (F1) ratio of 5.48, below the industry average of 10.83. Also, its price/sales ratio of 1.65 is lower than the industry’s 1.84.
Other Stocks Worth a Look
A few other top-ranked stocks from the finance space are mentioned below.
ETRADE Financial Corporation ETFC witnessed an upward earnings estimate revision of 13% for the current year over the past 60 days. Its share price has increased 21.2% over the past three months. It currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for TD Ameritrade Holding Corporation’s AMTD current fiscal-year earnings has been revised 21.7% upward over the past 60 days. Its share price has increased 5.6% over the past three months. The company currently sports a Zacks Rank #1.
Interactive Brokers IBKR witnessed an upward earnings estimate revision of 26.9% for the current year over the past 60 days. Its share price has increased 28.2% over the past three months. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
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