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4 Reasons to Invest in Commerce Bancshares (CBSH) Stock Now

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Joe Biden’s victory in the U.S. Presidential elections along with rising hopes regarding the development of a vaccine for COVID-19 have instilled bullish analyst sentiments off late. Thus, almost all bank stocks have been soaring. Hence, despite the continued low interest rate environment, which hurts banks’ top line, it seems to be a wise idea to add bank stocks to your portfolio now.

And, supported by improving loan balances along with a solid liquidity position, Commerce Bancshares, Inc. (CBSH - Free Report) offers a profitable investment opportunity now.

Moreover, the company has been witnessing upward earnings estimate revisions lately, reflecting analysts’ optimism regarding its earnings growth potential. The Zacks Consensus Estimate for its current-year earnings has been revised 22.7% upward over the past 30 days, while that for the next year has been revised upward by 11.2%.

Thus, the company currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Looking at its price performance, shares of the company have gained 23.8% over the past six months compared with the industry’s growth of 34.5%.

Mentioned below are some other factors that make Commerce Bancshares stock an attractive investment option now.

Earnings per Share (EPS) Growth: The company witnessed EPS growth of 11.5% in the last three to five years, marginally higher than the industry’s average of 11.3%. While earnings are projected to decline 20.1% in 2020, the trend will likely reverse after that. In 2021, earnings are expected to grow 21.4%.

Revenue Strength: Driven by higher loan balances, Commerce Bancshares’ net revenues have witnessed a five-year (2015-2019) compound annual growth rate (CAGR) of 6.2%. While the Zacks Consensus Estimate for 2020 revenues indicates a marginal decline from the year-ago quarter, revenues will likely improve thereafter, given the continued rise in demand for loans and the company’s solid fee income performance.

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 10.49% compares favorably with the industry’s 9.00%.

Strong Leverage: Commerce Bancshares’ debt/equity ratio is 0.00 versus the industry’s average of 0.39. 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 Key Picks

A few other top-ranked stocks from the finance space are mentioned below.

Moody’s Corporation (MCO - Free Report) has witnessed an upward earnings estimate revision of 8.2% for the current year over the past 60 days. Its shares have gained 8% over the past six months. The company carries a Zacks Rank #2 (Buy), at present.

Interactive Brokers Group, Inc.’s (IBKR - Free Report) earnings estimates have been revised 1.8% upward for the current year over the past 60 days. Over the past six months, this Zacks Rank #2 company has gained 31.9%.

BlackRock, Inc.’s (BLK - Free Report) earnings estimates for the current year have been revised 8.9% upward over the past 60 days. Its shares have witnessed a rise of 45.4% over the past six months. The company currently carries a Zacks Rank #2.

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