It's been a good week for Commerce Bancshares, Inc. (NASDAQ:CBSH) shareholders, because the company has just released its latest first-quarter results, and the shares gained 5.4% to US$58.22. Statutory earnings per share fell badly short of expectations, coming in at US$0.44, some 37% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at US$328m. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
After the latest results, the eight analysts covering Commerce Bancshares are now predicting revenues of US$1.31b in 2020. If met, this would reflect an okay 5.6% improvement in sales compared to the last 12 months. Statutory earnings per share are forecast to crater 20% to US$2.56 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.31b and earnings per share (EPS) of US$2.82 in 2020. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$54.80, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Commerce Bancshares, with the most bullish analyst valuing it at US$64.00 and the most bearish at US$35.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to the analysts, with revenue forecast to grow 5.6%, in line with its 5.1% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 2.8% per year. So it's pretty clear that Commerce Bancshares is forecast to grow substantially faster than its industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Commerce Bancshares. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$54.80, with the latest estimates not enough to have an impact on their price targets.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Commerce Bancshares going out to 2022, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Commerce Bancshares .
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