Analyzing and writing about a bank like Commerce Bancshares (NASDAQ:CBSH)
can be a frustrating exercise, because there's nothing really wrong
with this conservatively-run Midwestern institution, but the upside in
the shares, absent a new growth driver, just isn't impressive. Like U.S. Bancorp (NYSE:USB),
though, Commerce Bancshares knows what it is, and the management is not
going to change course just to make the shares a little more exciting
for short-term speculators.
I continue to believe that CBSH can leverage its
low-cost deposit base in Kansas and Missouri, along with rising rates
and good fee income growth, to generate mid-teens ROE down the road,
supporting cash earnings growth of around 7% for the next five years.
That's not enough to drive a compelling fair value today, but Commerce
looks like a safer bet for investors who believe interest rate hikes
will be slow to arrive and that credit conditions could get a little
hairy in the short term.
Read the full article here:
Commerce Bancshares Has A Strong Core, But Needs More Cardio
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