UMB Financial (NASDAQ:UMBF – Get Free Report) and Commerce Bancshares (NASDAQ:CBSH – Get Free Report) are both mid-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, analyst recommendations, earnings, dividends and profitability.
Profitability
This table compares UMB Financial and Commerce Bancshares’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| UMB Financial | 15.42% | 12.27% | 1.05% |
| Commerce Bancshares | 26.37% | 16.01% | 1.74% |
Analyst Recommendations
This is a breakdown of recent ratings and target prices for UMB Financial and Commerce Bancshares, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| UMB Financial | 0 | 3 | 5 | 1 | 2.78 |
| Commerce Bancshares | 0 | 7 | 0 | 0 | 2.00 |
Risk & Volatility
UMB Financial has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.
Institutional and Insider Ownership
87.8% of UMB Financial shares are owned by institutional investors. Comparatively, 70.3% of Commerce Bancshares shares are owned by institutional investors. 5.5% of UMB Financial shares are owned by company insiders. Comparatively, 3.1% of Commerce Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
UMB Financial pays an annual dividend of $1.60 per share and has a dividend yield of 1.3%. Commerce Bancshares pays an annual dividend of $1.10 per share and has a dividend yield of 1.8%. UMB Financial pays out 18.4% of its earnings in the form of a dividend. Commerce Bancshares pays out 26.2% 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. UMB Financial has increased its dividend for 32 consecutive years and Commerce Bancshares has increased its dividend for 58 consecutive years. Commerce Bancshares is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Valuation & Earnings
This table compares UMB Financial and Commerce Bancshares”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| UMB Financial | $2.80 billion | 3.38 | $441.24 million | $8.70 | 14.31 |
| Commerce Bancshares | $2.09 billion | 3.88 | $526.33 million | $4.20 | 14.42 |
Commerce Bancshares has lower revenue, but higher earnings than UMB Financial. UMB Financial is trading at a lower price-to-earnings ratio than Commerce Bancshares, indicating that it is currently the more affordable of the two stocks.
About UMB Financial
UMB Financial Corporation operates as the bank holding company that provides banking services and asset servicing in the United States and internationally. The Commercial Banking segment provides commercial loans and credit card; commercial real estate financing; letters of credit; loan syndication, and consultative service; various business solutions including asset-based lending, mezzanine debt, and minority equity investment; and treasury management service, such as depository service, account reconciliation, cash management tool, accounts payable and receivable solution, electronic fund transfer and automated payment, controlled disbursement, lockbox service, and remote deposit capture service. The Institutional Banking segment offers fund, asset management, and healthcare service to institutional clients; and fund administration and accounting, investor service and transfer agency, mutual fund service, alternative investment service, fixed income sale, trading and underwriting, and corporate trust and escrow service, as well as institutional custody service. This segment also provides healthcare payment solution includes custodial service for health saving accounts and private label, multipurpose debit cards to insurance carriers, third-party administrator, software companies, employers, and financial institutions. The Personal Banking segment offers deposit account, retail credit card, private banking, installment loan, home equity line of credit, residential mortgage, as well as internet banking, ATM network, private banking, brokerage and insurance service, and investment advisory, custody, and trust services. It operates through a network of branches and offices. The company was founded in 1913 and is headquartered in Kansas City, Missouri.
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.
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