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4 Reasons to Bet on Commerce Bancshares Stock Right Now

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After Donald Trump won the Presidential election, banking stocks once again were in the limelight. This is because the market is expecting lesser regulations and better interest rate environment under his administration. The recent hike in rates by the Fed further boosted investors’ optimism.

Therefore, it seems to be the right time to add few banking stocks to your portfolio now. Commerce Bancshares, Inc. (CBSH - Free Report) is one such stock which is worth considering.

Shares of the company have gained 43.5% year to date, outpacing the 34.4% growth for the Zacks categorized Midwest Banking industry.



Looking at the estimate revision trend, the company’s earnings estimate for the current year has been revised 1.1% upward, over the past 60 days. As a result, the stock carries a Zacks Rank #2 (Buy). This indicates that there is still upside left for this stock.

Fundamentals Show a Lot of Promise

Revenue Growth: Commerce Bancshares’s net revenues reflected compounded annual growth rate (“CAGR”) of 2.1%, over the last three years (2013–2015). The sturdy top-line increase has been backed by strong loan and deposit growth.

The company’s projected sales growth (F1/F0) of 8.8% for 2016 (as against the industry average of about 4.3%) indicates its superiority in generating revenues.

Earnings Per Share (EPS) Strength: Commerce Bancshares has witnessed 8.3% growth in earnings per share over the last three to five years.

Earnings growth is expected to continue in the near term as well. The company’s projected EPS growth (F1/F0) is 8.5% and (F2/F1) is 4.8%.

Strong Leverage: Commerce Bancshares’s debt/equity ratio is at 0.04 compared with the industry average of 0.43, indicating lower debt burden relative to the industry. It highlights the financial stability of the company even in an unstable economic environment.

Superior Return on Equity (ROE): Commerce Bancshares’s ROE was 11.2%, compared with the industry average of 8.9%, reflecting the company’s commendable position over its peers.

Other Stocks to Consider

Some other stocks in the same space worth considering include First Midwest Bancorp, Inc. , Farmers National Banc Corp. (FMNB - Free Report) and First Busey Corporation (BUSE - Free Report) .

First Midwest has an expected year-over-year earnings growth of 8.3% for 2016. Its share price has risen more than 38%, year to date. It currently boasts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Farmers National also sports a Zacks Rank #1. For the current year, it has an expected year-over-year earnings growth of 35.1%. Its share price has increased 66.9%, year to date.

First Busey carries a Zacks Rank #2. It has an expected year-over-year earnings growth of 13.8% for 2016. Its share price is up 49.8%, year to date.

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