Merchants Bancorp (NASDAQ: MBIN)

Sector: Financial Services Industry: Banks - Regional CIK: 0001629019
Market Cap 1.54 Bn
P/B 0.69
P/E 7.72
P/S 2.58
ROIC (Qtr) 4.75
Div Yield % 1.46
Rev 1y % (Qtr) -0.58
Total Debt (Qtr) 2.90 Bn
Debt/Equity (Qtr) 1.30

About

Merchants Bancorp, known by its ticker symbol MBIN, is a diversified bank holding company that operates within the financial services industry. The company is based in Carmel, Indiana, and has a rich history dating back to 1990 when it was founded as a mortgage banking company. Today, Merchants Bancorp operates in several business segments, including Multi-Family Mortgage Banking, Mortgage Warehousing, and Banking. Merchants Bancorp's main business activities involve originating and servicing multi-family housing and healthcare facility loans....

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Price action

Investment thesis

Bull case

  • Strong tangible asset base of 19.13B provides 6.59x coverage of total debt 2.90B, indicating robust asset backing and low credit risk.
  • Cash reserves of 598.04M provide comfortable 20.64x coverage of tax obligations 28.97M, showing strong fiscal management.
  • Retained earnings of 1.43B provide strong 6.47x coverage of intangibles 221.17M, indicating quality earnings retention.
  • Retained earnings of 1.43B represent substantial 0.64x of equity 2.23B, indicating strong internal capital generation.
  • Strong tangible asset base of 19.13B provides 86.51x coverage of intangibles 221.17M, indicating robust asset quality.

Bear case

  • Operating cash flow of 46.67M barely covers its investment activities of (251.87M), with a coverage ratio of -0.19, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 46.67M provides thin coverage of dividend payments of (59.41M) with a -0.79 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 598.04M provide limited coverage of acquisition spending of (29.90M), which is -20x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 46.67M provides minimal 0.66x coverage of tax expenses of 71.21M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 23.26M represents just -0.03x of debt issuance (667.59M), suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Banks - Regional
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 USB Us Bancorp \De\ 84.44 Bn 12.40 3.25 77.98 Bn
2 PNC Pnc Financial Services Group, Inc. 84.36 Bn 13.61 3.73 62.34 Bn
3 NU Nu Holdings Ltd. 81.47 Bn 32.21 5.79 4.49 Bn
4 NWG NatWest Group plc 66.53 Bn 9.88 3.05 169.04 Bn
5 TFC Truist Financial Corp 64.60 Bn 13.18 3.53 71.11 Bn
6 MTB M&T Bank Corp 32.73 Bn 12.47 3.60 14.99 Bn
7 FITB Fifth Third Bancorp 31.96 Bn 14.15 3.93 18.94 Bn
8 FCNCA First Citizens Bancshares Inc /De/ 28.98 Bn 12.78 3.26 40.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.25 0.14
EV to Cash from Ops. EV/CFO 105.08 7.21
EV to Debt EV to Debt 1.69 5.20
EV to EBIT EV/EBIT 15.43 14.98
EV to EBITDA EV/EBITDA 15.29 8.92
EV to Free Cash Flow [EV/FCF] EV/FCF 210.85 8.87
EV to Market Cap EV to Market Cap 3.18 1.04
EV to Revenue EV/Rev 8.21 -3.76
Price to Book Value [P/B] P/B 0.69 1.17
Price to Earnings [P/E] P/E 7.72 15.63
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.88 271.44
Dividend Payout Ratio % Div Payout % (Qtr) 8.90 35.28
Dividend per Basic Share Div per Share (Qtr) 0.39 0.89
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 76.92 34.52
Interest Coverage Interest Coverage 0.00 -0.05
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -44.66 -73.15
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -0.64 15.78
Dividend Growth (1y) % Div 1y % (Qtr) 11.43 5.32
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -18.40 110.93
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -19.22 38.80
EBIT Growth (1y) % EBIT 1y % (Qtr) -19.39 61.46
EBT Growth (1y) % EBT 1y % (Qtr) -19.39 61.37
EPS Growth (1y) % EPS 1y % (Qtr) -28.17 76.34
FCF Growth (1y) % FCF 1y % (Qtr) 122.12 161.72
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -1.67 14.15
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.03 0.04
Cash Payout Ratio Cash Payout (Qtr) 2.56 0.26
Cash Ratio Cash Ratio 0.00 0.00
Current Ratio Current Ratio 0.00 0.01
Debt to Equity Ratio Debt/Equity (Qtr) 1.30 0.53
Interest Cover Ratio Interest Cover Ratio 0.00 -0.05
Times Interest Earned Times Interest Earned 0.00 -0.05
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 53.70 147.97
EBIT Margin % EBIT Margin % (Qtr) 53.21 155.41
EBT Margin % EBT Margin % (Qtr) 53.21 154.66
Gross Margin % Gross Margin % (Qtr) 100.00 97.82
Net Profit Margin % Net Margin % (Qtr) 33.40 115.63