Here's Why Merchants Bancorp (MBIN) Stock is Worth Betting on

Core Viewpoint - Merchants Bancorp (MBIN) is positioned for growth due to its diversified client base, strong liquidity, capital base, and a solid loan pipeline, alongside initiatives to mitigate interest rate risks [1] Earnings Growth - Merchants Bancorp has experienced earnings growth of 34.32% over the past three to five years, significantly outperforming the industry average of 6.76% [3] - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 13.1% for 2024 [5] - The company has a strong earnings surprise history, surpassing the Zacks Consensus Estimate in each of the last four quarters with an average beat of 18.48% [4] Revenue Strength - Revenues have shown a compound annual growth rate (CAGR) of 35% from 2019 to 2023, driven by growth in both non-interest and net interest income [6] - Net loans and total deposits have also seen a CAGR of 35.4% and 26.6%, respectively, over the same period [6] - The Zacks Consensus Estimate forecasts revenue growth of 16.5% for 2024 and 2.7% for 2025 [8] Strong Balance Sheet - As of March 31, 2024, total cash and cash equivalents were $508.8 million, with other liabilities at $190.5 million, indicating a solid liquidity position [8] - The tier 1 risk-based capital ratio and common equity tier-1 capital ratio were 11.1% and 7.8%, respectively, both exceeding regulatory requirements [9] Valuation Metrics - MBIN's price-to-cash-flow and price-to-earnings (F1) ratios are 5.99 and 6.13, respectively, which are below the industry averages of 7.83 and 9.96, suggesting the stock is undervalued compared to peers [10][11] Return on Equity - The trailing 12-month return on equity (ROE) for Merchants Bancorp is 26.65%, significantly higher than the industry average of 8.61%, indicating effective utilization of shareholders' funds [11]