Critical Comparison: Commerce Bancshares (NASDAQ:CBSH) versus Peoples Bancorp (NASDAQ:PEBO)

Peoples Bancorp (NASDAQ:PEBO) and Commerce Bancshares (NASDAQ:CBSH) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.

Dividends

Peoples Bancorp pays an annual dividend of $1.68 per share and has a dividend yield of 4.9%. Commerce Bancshares pays an annual dividend of $1.10 per share and has a dividend yield of 2.1%. Peoples Bancorp pays out 53.8% of its earnings in the form of a dividend. Commerce Bancshares pays out 26.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Peoples Bancorp has raised its dividend for 10 consecutive years and Commerce Bancshares has raised its dividend for 58 consecutive years.

Valuation and Earnings

This table compares Peoples Bancorp and Commerce Bancshares”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Peoples Bancorp	$618.38 million	1.99	$106.78 million	$3.12	10.99
Commerce Bancshares	$2.14 billion	3.49	$566.25 million	$4.17	12.28

Commerce Bancshares has higher revenue and earnings than Peoples Bancorp. Peoples Bancorp is trading at a lower price-to-earnings ratio than Commerce Bancshares, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Peoples Bancorp has a beta of 0.62, indicating that its stock price is 38% less volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Profitability

This table compares Peoples Bancorp and Commerce Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Peoples Bancorp	17.92%	9.75%	1.21%
Commerce Bancshares	26.37%	14.78%	1.73%

Analyst Ratings

This is a breakdown of current ratings and price targets for Peoples Bancorp and Commerce Bancshares, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Peoples Bancorp	0	3	3	0	2.50
Commerce Bancshares	0	8	1	0	2.11

Peoples Bancorp presently has a consensus price target of $37.00, suggesting a potential upside of 7.93%. Commerce Bancshares has a consensus price target of $59.30, suggesting a potential upside of 15.85%. Given Commerce Bancshares’ higher possible upside, analysts plainly believe Commerce Bancshares is more favorable than Peoples Bancorp.

Institutional & Insider Ownership

60.7% of Peoples Bancorp shares are owned by institutional investors. Comparatively, 70.3% of Commerce Bancshares shares are owned by institutional investors. 3.3% of Peoples Bancorp shares are owned by company insiders. Comparatively, 1.8% of Commerce Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Commerce Bancshares beats Peoples Bancorp on 12 of the 17 factors compared between the two stocks.

About Peoples Bancorp

Peoples Bancorp Inc. operates as the holding company for Peoples Bank that provides commercial and consumer banking products and services. The company accepts various deposit products, including demand deposit accounts, savings accounts, money market accounts, certificates of deposit, and governmental deposits; and provides commercial and industrial, commercial real estate, construction, finance, residential real estate, and consumer indirect and direct loans, as well as home equity lines of credit and overdrafts. It also offers debit and automated teller machine (ATM) cards; safe deposit rental facilities; money orders and cashier’s checks; and telephone, mobile, and online banking services. In addition, the company provides various life, health, and property and casualty insurance products; third-party insurance administration; interactive teller machines; insurance premium financing; check deposit and alert notification; commercial and technology equipment leasing; fiduciary and trust; underwriting, origination, and servicing of equipment leases, and equipment financing agreements; and asset management and administration services, as well as employee benefit, retirement, and health care plan administration services. Further, it offers brokerage services through an unaffiliated registered broker-dealers; insurance premium finance lending and leasing; and credit cards to individuals and businesses, as well as provides merchant credit card transaction processing, and person-to-person payment processing services. Peoples Bancorp Inc. was founded in 1902 and is headquartered in Marietta, Ohio.

About Commerce Bancshares

Commerce Bancshares, Inc. operates as the bank holding company for Commerce Bank that provides retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses in the United States. It operates through three segments: Consumer, Commercial, and Wealth. The Consumer segment offers various banking products and services, including consumer deposits; consumer loans, such as automobile, motorcycle, marine, tractor/trailer, recreational vehicle, fixed rate and revolving home equity, and other consumer loans; patient health care financing; real estate loans; indirect and other consumer financing; retail branch network; personal mortgage banking; consumer installment lending; and consumer debit and credit bank cards. The Commercial segment provides corporate lending, leasing, international, merchant and commercial bank card, and securities safekeeping and bond accounting services; and business products, government deposits, and related commercial cash management services, as well as sells fixed income securities to correspondent banks, corporations, public institutions, municipalities, and individuals. The Wealth segment provides traditional trust and estate planning, advisory and discretionary investment portfolio management, and brokerage services, as well as private banking accounts. The company also offers private equity investment, securities brokerage, insurance agency, specialty lending, and leasing services, as well as online and mobile banking services. Commerce Bancshares, Inc. was founded in 1865 and is headquartered in Kansas City, Missouri.