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What Makes Commerce Bancshares a Hot Pick for Investors?

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Suncor (Su) Q3 Earnings Beat on Higher Production & Prices

Suncor's (SU) third quarter delivers better-than-expected earnings on improved commodity price realizations, higher refining margins, along with robust production volumes from Hebron and Fort Hills.

Commerce Bancshares Inc. CBSH boasts of solid top-line growth, and robust loans and deposits balance. Also, the bank’s strong capital position and earnings strength have been supporting its capital-deployment activities.

Further, analysts seem to be optimistic about the company’s growth prospects. The Zacks Consensus Estimate for current-quarter earnings rose 7.9%, while for full-year 2018, it moved 7.5% north, over a period of 60 days.

Also, this Zacks Rank #2 (Buy) stock has gained 22.1% in the past six months, outperforming the 7.6% growth recorded by the industry.  

5 Reasons Why Commerce Bancshares is an Attractive Pick

Earnings Strength: Over the past three to five years, Commerce Bancshares recorded earnings per share growth of 6.8%.  The company’s earnings growth rate is projected at 40.1% for 2018 and 2.3% for 2019, thus continuing the growth momentum.

Earnings are projected to grow at a rate of 9.7%, over the long-term, compared to the industry’s estimated growth rate of 8.9%.

Also, Commerce Bancshares has a decent earnings surprise history. The bank delivered an average positive earnings surprise of 6.9% over the trailing four quarters.

Revenue Growth: Organic growth remains a key strength for Commerce Bancshares. Net revenues witnessed a compound annual growth rate of 4.9%, over the last four years (2014-2017), with the trend continuing during the first six months of 2018 as well.  

The company’s projected sales growth of 8.2% for 2018 and 4.08% for 2019 indicates constant upward momentum in revenues.

Impressive Capital Deployment: The company has been consistently paying a 5% stock dividend for more than a decade now (the last was announced in October 2017). This apart, the company pays regular quarterly cash dividends and has a share-repurchase program in place. As of Jun 30, 2018, nearly 3.2 million shares were left to be repurchased. Driven by a strong capital position, it is expected to continue deploying capital efficiently.

Strong Leverage: Commerce Bancshares has a debt/equity ratio of 0.00 compared with the industry’s average of 0.51. This highlights the company’s robust financial position which will help it tackle any adverse market scenario.

Favorable Return on Equity (ROE): Commerce Bancshares’ ROE of 14.24% reflects its superiority in terms of utilizing shareholders’ funds. It also compares favorably with the industry’s ROE of 10.18%.

Other Stocks Worth Considering

Some other stocks in the same space are Enterprise Financial Services Corporation EFSC, Farmers National Banc Corp. FMNB and First Merchants Corporation FRME. All three stocks carry a Zacks Rank #2 (Buy). You can seesee the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Over the last 60 days, the Zacks Consensus Estimate for Enterprise Financial Services’ current-year earnings has been revised 3.3% upward. Its share price has surged 50.4% over the past year.

Farmers National’s earnings estimates for 2018 inched up 0.9%, in 60 days’ time. Its shares have gained 27.7% in a year’s time.

Over the last 60 days, First Merchants’ 2018 earnings estimate moved 2.6% north. Over the past year, the stock has appreciated 24%.

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