A week ago, Commerce Bancshares, Inc. (NASDAQ:CBSH) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$400m arriving 2.7% ahead of forecasts. Statutory earnings per share (EPS) were US$0.86, 7.2% ahead of estimates. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Taking into account the latest results, the current consensus from Commerce Bancshares' eight analysts is for revenues of US$1.61b in 2024. This would reflect an okay 3.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to accumulate 4.9% to US$3.77. Before this earnings report, the analysts had been forecasting revenues of US$1.58b and earnings per share (EPS) of US$3.27 in 2024. Although the revenue estimates have not really changed, we can see there's been a solid gain to earnings per share expectations, suggesting that the analysts have become more bullish after the latest result.
There's been no major changes to the consensus price target of US$55.75, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Commerce Bancshares analyst has a price target of US$61.00 per share, while the most pessimistic values it at US$52.00. This is a very narrow spread of estimates, implying either that Commerce Bancshares is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Commerce Bancshares' past performance and to peers in the same industry. We would highlight that Commerce Bancshares' revenue growth is expected to slow, with the forecast 4.1% annualised growth rate until the end of 2024 being well below the historical 5.2% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 5.8% per year. Factoring in the forecast slowdown in growth, it seems obvious that Commerce Bancshares is also expected to grow slower than other industry participants.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Commerce Bancshares following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Commerce Bancshares' revenue is expected to perform worse than the wider industry. The consensus price target held steady at US$55.75, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Commerce Bancshares. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Commerce Bancshares going out to 2026, and you can see them free on our platform here..
Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Commerce Bancshares (1 is a bit concerning) you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.