Commerce Bancshares: In Tougher Times, The 'Platinum Tortoise' Outperforms

I've criticized the premium multiple of Commerce Bancshares (NASDAQ:CBSH) in the past, but in tougher times like these, the Street certainly seems to appreciate the quality core deposits and demonstrated underwriting competence of this conservatively-run Midwestern bank. To that end, the shares are almost flat since my last update, a period during which the average regional bank stock lost around 10% of its value.

I'm not excited about paying over 16.5x my forward EPS estimate for CBSH, and likewise, a long-term discounted core earnings model doesn't suggest a great bargain today. That's par for the course with these shares, though, and I suspect long-term holders of these shares won't be bothered by it. I do think banks, as a sector, are undervalued now and as sentiment turns, I don't expect Commerce to continue to outperform given the more moderate growth outlook and the already-robust valuation.

 

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Commerce Bancshares: In Tougher Times, The 'Platinum Tortoise' Outperforms