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

Insider and Institutional Ownership

66.3% of Sandy Spring Bancorp shares are held by institutional investors. Comparatively, 62.1% of Commerce Bancshares shares are held by institutional investors. 2.6% of Sandy Spring Bancorp shares are held by insiders. Comparatively, 4.3% of Commerce Bancshares shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Profitability

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

Net Margins Return on Equity Return on Assets
Sandy Spring Bancorp 23.34% 9.80% 1.06%
Commerce Bancshares 23.79% 12.01% 1.15%

Risk and Volatility

Sandy Spring Bancorp has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500.

Dividends

Sandy Spring Bancorp pays an annual dividend of $1.04 per share and has a dividend yield of 2.6%. Commerce Bancshares pays an annual dividend of $0.90 per share and has a dividend yield of 1.6%. Sandy Spring Bancorp pays out 47.7% of its earnings in the form of a dividend. Commerce Bancshares pays out 32.6% 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. Sandy Spring Bancorp has increased its dividend for 48 consecutive years. Sandy Spring Bancorp is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Sandy Spring Bancorp and Commerce Bancshares’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Sandy Spring Bancorp $199.49 million 4.76 $52.26 million $2.18 18.17
Commerce Bancshares $1.15 billion 5.14 $282.05 million $2.76 20.94

Commerce Bancshares has higher revenue and earnings than Sandy Spring Bancorp. Sandy Spring 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.

Analyst Ratings

This is a breakdown of current recommendations for Sandy Spring Bancorp and Commerce Bancshares, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Sandy Spring Bancorp 0 1 0 0 2.00
Commerce Bancshares 2 5 0 0 1.71

Sandy Spring Bancorp presently has a consensus price target of $40.00, indicating a potential upside of 0.96%. Commerce Bancshares has a consensus price target of $53.57, indicating a potential downside of 7.22%. Given Sandy Spring Bancorp’s stronger consensus rating and higher probable upside, research analysts clearly believe Sandy Spring Bancorp is more favorable than Commerce Bancshares.

Summary

Commerce Bancshares beats Sandy Spring Bancorp on 10 of the 16 factors compared between the two stocks.

About Sandy Spring Bancorp

Sandy Spring Bancorp, Inc. is the bank holding company for Sandy Spring Bank (the Bank). The Company operates through three segments: Community Banking, Insurance and Investment Management. The Company’s Community Banking segment operates through Sandy Spring Bank and involves delivering a range of financial products and services, including various loan and deposit products to both individuals and businesses. The Insurance segment operates through Sandy Spring Insurance Corporation, a subsidiary of the Bank, and offers annuities as an alternative to traditional deposit accounts. The Investment Management segment operates through West Financial Services, Inc., a subsidiary of the Bank, which provides investment management and financial planning services. As of December 31, 2016, the Bank conducted commercial banking business through 44 community offices and six financial centers located in Central Maryland, Northern Virginia and Washington D.C.

About Commerce Bancshares

Commerce Bancshares, Inc. is a bank holding company of Commerce Bank (the Bank). The Bank is engaged in general banking business, providing a range of retail, mortgage banking, corporate, investment, trust and asset management products and services to individuals and businesses. The Company operates through three segments: Consumer, Commercial and Wealth. The Consumer segment includes the consumer portion of the retail branch network (loans, deposits and other personal banking services), indirect and other consumer financing, and consumer debit and credit bank cards. The Commercial segment provides corporate lending, leasing, international services, and business, government deposit, and related commercial cash management services, as well as merchant and commercial bank card products. The Wealth segment provides traditional trust and estate tax planning, advisory and discretionary investment management, and brokerage services, and includes the Private Banking product portfolio.

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