CBSH
Commerce Bancshares, Inc.
$52.37
Banks, Insurers & Asset Managers
85%
P/Tangible Book × ROE Quality
Moderate
·
Conviction
Undervalued
Trading 30.1% below fair value
You pay
$52.37
Bear
$49.71
Fair
$74.88
Bull
$89.99
Bear
$49.71
-5.1%
ROTCE 11.7% → 2.14x TBV
Fair
$74.88
+43.0%
ROTCE 15.6% → 3.23x TBV
Bull
$89.99
+71.8%
ROTCE 17.9% → 3.88x TBV
Key Value Driver
ROTCE (15.6%) vs. cost of equity (7.6%)
Implied Market Multiple
2.1x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $58.50 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $74.88 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: $15.67 (80% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $58.50 (from 15 analysts). Our estimate is 37% 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