Company Overview
Commerce Bancshares, Inc. operates as the bank holding company for Commerce Bank, providing a comprehensive suite of retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses throughout the United States. The institution functions within the Financial Services sector, specifically classified under the Banks - Regional industry, which defines its operational scope as serving local and regional markets rather than acting as a systemically important global entity. The company demonstrates significant scale with a market capitalization of $7.08B, annual revenue of $1.71B, and an employee base of 4577, positioning it as a substantial player within the regional banking landscape. These valuation and revenue figures indicate that Commerce Bancshares, Inc. commands a considerable market presence, reflecting the aggregate value of its equity and the operational magnitude of its revenue generation relative to its workforce size.
Financial Health
The company reported revenue of $1.71B and net income of $560.87M for the trailing twelve months, while EBITDA data is not available for this specific reporting period. The substantial gap between the total revenue of $1.71B and the net income of $560.87M reveals a cost structure where operating expenses, including provision for loan losses and overhead, absorb approximately 66.9% of total revenue before reaching the bottom line. Free cash flow figures are not disclosed in the available data, meaning specific insights into the company's immediate financial flexibility derived from cash generation must be inferred from other balance sheet metrics. The company reports a gross margin of 0.0%, which is standard for financial institutions as their primary revenue is interest-based rather than product-margin based, followed by an operating margin of 42.6% and a profit margin of 33.1%. The operating margin of 42.6% indicates that after covering operating expenses, the company retains a significant portion of its pre-tax earnings, while the 33.1% profit margin demonstrates the efficiency of its tax management and overall cost control relative to total revenue. On the balance sheet, Commerce Bancshares, Inc. holds cash of $4.49B against total debt of $3.05B, suggesting a conservative liquidity posture where cash reserves exceed total debt obligations. However, the debt-to-equity ratio is not provided, preventing a direct calculation of leverage relative to shareholders' equity. The current ratio is also not available, so a direct assessment of short-term liquidity using current assets versus current liabilities cannot be quantified from the provided data. Return on Equity stands at 16.0%, which indicates that the company generates $1.60 of net income for every $1.00 of shareholder equity, reflecting strong management effectiveness in deploying capital. Additionally, the Return on Assets metric is 1.8%, showing the efficiency with which the company utilizes its total asset base to generate net income.
Valuation Assessment
The trailing twelve-month P/E ratio is 11.90, while the forward P/E is 10.96, implying that the market expects earnings growth that would lower the valuation multiple over the coming year. The difference between the trailing P/E of 11.90 and the forward P/E of 10.96 suggests an anticipated improvement in earnings per share relative to the current stock price. The price-to-book ratio is 1.75, indicating that the market values the company at a premium of 75% over its tangible book value, which often reflects intangible assets or growth expectations in regional banking. The price-to-sales ratio stands at 4.14, and EV/EBITDA is not available, providing alternative perspectives on valuation that focus on revenue generation rather than just earnings or enterprise value. The stock has traded between a 52-week low of $46.99 and a 52-week high of $63.19, and without the specific current share price, the exact percentage distance from the high or low cannot be calculated, but the range defines the recent volatility bounds. The beta value is 0.60, which indicates that the stock is significantly less volatile than the broader market, moving with only 60% of the magnitude of market fluctuations. This lower beta suggests that the stock may provide a more stable return profile compared to high-beta equities, potentially appealing to investors seeking lower volatility within the financial services sector.
Growth & Income
Revenue growth year-over-year is 6.5%, and earnings growth year-over-year is 5.0%, indicating that earnings are growing slightly slower than revenue, which can imply that margin compression or reinvestment in operations is currently outpacing top-line expansion. For dividend payers, the company offers a dividend yield of 2.3% with a payout ratio of 26.3%, suggesting that the dividend is highly sustainable given that less than one-third of net income is distributed to shareholders. This low payout ratio leaves ample room for the company to retain earnings for capital deployment, loan growth, or share buybacks without jeopardizing the dividend. The overall growth and income profile presents a scenario of moderate revenue expansion supported by a conservative dividend policy that prioritizes capital retention over aggressive shareholder payouts.