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4 Reasons to Add Commerce Bancshares (CBSH) to Your Portfolio

Commerce Bancshares, Inc. CBSH is well-positioned for top-line growth, supported by the rise in loan balances and its efforts to strengthen fee income. The bank is expected to keep enhancing shareholder value through efficient capital deployment activities, which reflect strong balance sheet and liquidity positions. Hence, it seems to be a wise idea to add the stock to your portfolio now.

Analysts also seem optimistic regarding CBSH’s earnings growth potential. The Zacks Consensus Estimate for the company’s current-year earnings has been revised 3.9% upward over the past 30 days. Thus, Commerce Bancshares currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Looking at its price performance, shares of the company have gained 5.4% in the past year against the industry’s decline of 0.3%.

 

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

 

Some other factors that make Commerce Bancshares stock an attractive investment option now are mentioned below.

Earnings per Share (EPS) Growth: The company witnessed EPS growth of 11.7% in the last three to five years, marginally higher than the industry’s average of 11.1%. While earnings are projected to decline 6.3% in 2022, the trend will likely reverse after that. In 2023, earnings are expected to grow 5.8%.

CBSH also has an impressive earnings surprise history. Its earnings have outpaced the Zacks Consensus Estimate in three and matched in one of the trailing four quarters, the average beat being 3.8%.

Revenue Strength: Commerce Bancshares’ net revenues witnessed a five-year (2017-2021) compound annual growth rate (CAGR) of 4%. The upside mainly stemmed from solid loans and deposit balances (which saw a CAGR of 1.8% and 9.9%, respectively, over the same period), along with strength in fee income sources. The rise in the demand for loans and solid fee income performance is likely to continue aiding revenue growth.

In 2022, revenues are anticipated to grow 6.2%, while in 2023, revenues are projected to increase 4.8%.

Superior Return on Equity (ROE): Commerce Bancshares’s trailing 12-month ROE reflects its superiority in terms of utilizing shareholders’ funds when compared with peers. The company’s ROE of 14.27% compares favorably with the industry’s 11.17%.

Strong Leverage: Commerce Bancshares’ debt/equity ratio is 0.00 versus the industry’s average of 0.27. This shows that it does not use any debt to finance its operations. Thus, the company will be financially stable, even in adverse economic conditions.

Other Stocks Worth Considering

A couple of other banks worth considering amid the current market backdrop are Associated Banc-Corp ASB and Zions Bancorporation ZION. Both ASB and ZION currently carry a Zacks Rank of 2.

Associated Banc-Corp’s Zacks Consensus Estimate for 2022 earnings has moved 11.1% upward over the past 30 days. In the past three months, ASB’s shares have gained 3.1%.

Zions’ Zacks Consensus Estimate for 2022 earnings has been revised 3.3% upward over the past month. ZION’s shares have lost 2.1% in the past three months.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report
 
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
 
Associated BancCorp (ASB) : Free Stock Analysis Report
 
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