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Commerce (CBSH) Up 2.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Commerce Bancshares (CBSH - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Commerce due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Commerce Bancshares Q4 Earnings In-Line, Revenues Up Y/Y
Commerce Bancshares’ fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.
Results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and fall in net interest income were the major headwinds.
Net income attributable to common shareholders was $114.9 million, down 11.5% year over year.
In 2021, earnings of $4.31 per share missed the consensus estimate of $4.34 and were up 55.6% year over year. Net income was $530.8 million, up 55.2% from 2020 level.
Revenues & Expenses Rise
Total quarterly revenues were $355.4 million, up 3% year over year. The top line beat the Zacks Consensus Estimate of $349.3 million.
In 2021, net revenues increased 4.5% to $1.39 billion. The top line matched the consensus estimate of $1.39 billion.
Net interest income was $207.7 million, down 1% from the prior-year quarter. Net yield on interest-earning assets contracted 37 basis points (bps) to 2.43%.
Non-interest income was $147.7 million, growing 9.3%. The upswing resulted from an increase in all fee income components, except for loan fees and sales.
Non-interest expenses increased 3.7% to $203.6 million. The rise was due to increase in all cost components.
Efficiency ratio increased to 57.29% from 56.68% in the year-ago quarter. A rise in efficiency ratio indicates deterioration in profitability.
As of Dec 31, 2021, total loans were $15.2 billion, marginally up from the prior quarter. Total deposits as of the same date were $29.8 billion, up 5.9%. Total stockholders’ equity was $3.4 billion, down 1.2% sequentially.
Credit Quality Improves
Provision for credit losses was a benefit of $7.1 million, up from $4.4 million in the prior-year quarter. The ratio of annualized net loan charge-offs to total average loans was 0.11%, down from 0.19% recorded in the year-earlier quarter.
Non-accrual loans to total loans were 0.06%, down 10 bps year over year. Allowance for credit losses on loans to total loans was 0.99%, declining 36 bps.
Capital & Profitability Ratios Deteriorate
As of Dec 31, 2021, Tier I leverage ratio was 9.13%, down from 9.45% recorded in the year-ago quarter. Tangible common equity to tangible assets ratio declined to 9.01% from the prior-year quarter’s 9.92%.
At the end of the fourth quarter, return on total average assets was 1.28%, down from the year-ago period’s 1.63%. Return on average common equity was 13.11%, down from 15.49% in the prior-year quarter.
Share Repurchase Update
During the quarter, Commerce Bancshares repurchased 696,367 shares at an average price of $70.81.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 7.92% due to these changes.
VGM Scores
At this time, Commerce has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Commerce has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Commerce (CBSH) Up 2.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Commerce Bancshares (CBSH - Free Report) . Shares have added about 2.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Commerce due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Commerce Bancshares Q4 Earnings In-Line, Revenues Up Y/Y
Commerce Bancshares’ fourth-quarter 2021 earnings per share of 94 cents matched the Zacks Consensus Estimate. The bottom line, however, declined 10.5% from the prior-year quarter.
Results primarily benefited from an improvement in non-interest income, a slight rise in loan balance and provision benefit. However, an increase in non-interest expenses and fall in net interest income were the major headwinds.
Net income attributable to common shareholders was $114.9 million, down 11.5% year over year.
In 2021, earnings of $4.31 per share missed the consensus estimate of $4.34 and were up 55.6% year over year. Net income was $530.8 million, up 55.2% from 2020 level.
Revenues & Expenses Rise
Total quarterly revenues were $355.4 million, up 3% year over year. The top line beat the Zacks Consensus Estimate of $349.3 million.
In 2021, net revenues increased 4.5% to $1.39 billion. The top line matched the consensus estimate of $1.39 billion.
Net interest income was $207.7 million, down 1% from the prior-year quarter. Net yield on interest-earning assets contracted 37 basis points (bps) to 2.43%.
Non-interest income was $147.7 million, growing 9.3%. The upswing resulted from an increase in all fee income components, except for loan fees and sales.
Non-interest expenses increased 3.7% to $203.6 million. The rise was due to increase in all cost components.
Efficiency ratio increased to 57.29% from 56.68% in the year-ago quarter. A rise in efficiency ratio indicates deterioration in profitability.
As of Dec 31, 2021, total loans were $15.2 billion, marginally up from the prior quarter. Total deposits as of the same date were $29.8 billion, up 5.9%. Total stockholders’ equity was $3.4 billion, down 1.2% sequentially.
Credit Quality Improves
Provision for credit losses was a benefit of $7.1 million, up from $4.4 million in the prior-year quarter. The ratio of annualized net loan charge-offs to total average loans was 0.11%, down from 0.19% recorded in the year-earlier quarter.
Non-accrual loans to total loans were 0.06%, down 10 bps year over year. Allowance for credit losses on loans to total loans was 0.99%, declining 36 bps.
Capital & Profitability Ratios Deteriorate
As of Dec 31, 2021, Tier I leverage ratio was 9.13%, down from 9.45% recorded in the year-ago quarter. Tangible common equity to tangible assets ratio declined to 9.01% from the prior-year quarter’s 9.92%.
At the end of the fourth quarter, return on total average assets was 1.28%, down from the year-ago period’s 1.63%. Return on average common equity was 13.11%, down from 15.49% in the prior-year quarter.
Share Repurchase Update
During the quarter, Commerce Bancshares repurchased 696,367 shares at an average price of $70.81.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
The consensus estimate has shifted 7.92% due to these changes.
VGM Scores
At this time, Commerce has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of F on the value side, putting it in the lowest quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Commerce has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.