Westamerica Bancorporation (NASDAQ: WABC) and Commerce Bancshares (NASDAQ:CBSH) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their earnings, valuation, dividends, risk, institutional ownership, analyst recommendations and profitability.

Profitability

This table compares Westamerica Bancorporation and Commerce Bancshares’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Westamerica Bancorporation 33.38% 10.28% 1.12%
Commerce Bancshares 23.93% 12.08% 1.17%

Dividends

Westamerica Bancorporation pays an annual dividend of $1.60 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%. Westamerica Bancorporation pays out 69.6% of its earnings in the form of a dividend. Commerce Bancshares pays out 33.5% 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. Westamerica Bancorporation has increased its dividend for 4 consecutive years and Commerce Bancshares has increased its dividend for 48 consecutive years.

Analyst Ratings

This is a summary of recent ratings and target prices for Westamerica Bancorporation and Commerce Bancshares, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Westamerica Bancorporation 0 2 0 0 2.00
Commerce Bancshares 3 5 0 0 1.63

Westamerica Bancorporation presently has a consensus price target of $56.00, indicating a potential downside of 8.29%. Commerce Bancshares has a consensus price target of $55.43, indicating a potential downside of 0.34%. Given Commerce Bancshares’ higher probable upside, analysts clearly believe Commerce Bancshares is more favorable than Westamerica Bancorporation.

Valuation and Earnings

This table compares Westamerica Bancorporation and Commerce Bancshares’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Westamerica Bancorporation $180.63 million 8.91 $58.85 million $2.30 26.55
Commerce Bancshares $1.19 billion 5.00 $275.39 million $2.69 20.71

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

Institutional & Insider Ownership

86.0% of Westamerica Bancorporation shares are held by institutional investors. Comparatively, 62.1% of Commerce Bancshares shares are held by institutional investors. 4.9% of Westamerica Bancorporation shares are held by company insiders. Comparatively, 4.3% of Commerce Bancshares shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility & Risk

Westamerica Bancorporation has a beta of 1.07, suggesting that its stock price is 7% more volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.

Westamerica Bancorporation Company Profile

Westamerica Bancorporation is a bank holding company. The Company provides a range of banking services to individual and corporate customers in Northern and Central California through its subsidiary bank, Westamerica Bank. The communities served are located in Northern and Central California, from Mendocino, Lake and Nevada Counties in the north to Kern County in the south. It provides a range of loans, including commercial loans, commercial real estate loans, construction loans, residential real estate loans, and consumer installment and other loans. It maintains a securities portfolio consisting of securities issued by the United States Treasury, United States Government sponsored entities, agency and non-agency mortgage backed securities (MBS), non-agency commercial MBS, agency residential collateralized mortgage obligations (CMO), non-agency residential CMO, obligations of states and political subdivisions, asset-backed securities, corporate securities and other securities.

Commerce Bancshares Company Profile

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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