CBSH
Commerce Bancshares, Inc.
$59.09
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Fair Value
Trading 24.3% below fair value
You pay
$59.09
Bear
$51.84
Fair
$78.11
Bull
$93.62
Bear
$51.84
-12.3%
ROTCE 11.7% → 2.22x TBV
Fair
$78.11
+32.2%
ROTCE 15.6% → 3.34x TBV
Bull
$93.62
+58.4%
ROTCE 17.9% → 4.00x TBV
Key Value Driver
ROTCE (15.6%) vs. cost of equity (7.5%)
Implied Market Multiple
2.37x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $63.00 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $78.11 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $15.95 (81% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $63.00 (from 15 analysts). Our estimate is 32% above the consensus -- consider that gap carefully.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly