Contrasting Commerce Bancshares (CBSH) and Luther Burbank (LBC)

Commerce Bancshares (NASDAQ: CBSH) and Luther Burbank (NASDAQ:LBC) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.

Institutional & Insider Ownership

64.8% of Commerce Bancshares shares are owned by institutional investors. Comparatively, 19.9% of Luther Burbank shares are owned by institutional investors. 4.0% of Commerce Bancshares shares are owned by insiders. Comparatively, 20.4% of Luther Burbank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings for Commerce Bancshares and Luther Burbank, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Commerce Bancshares 2 9 0 0 1.82
Luther Burbank 0 2 0 0 2.00

Commerce Bancshares presently has a consensus target price of $60.11, suggesting a potential downside of 8.63%. Luther Burbank has a consensus target price of $13.00, suggesting a potential upside of 4.50%. Given Luther Burbank’s stronger consensus rating and higher probable upside, analysts plainly believe Luther Burbank is more favorable than Commerce Bancshares.

Dividends

Commerce Bancshares pays an annual dividend of $0.94 per share and has a dividend yield of 1.4%. Luther Burbank pays an annual dividend of $0.23 per share and has a dividend yield of 1.8%. Commerce Bancshares pays out 33.9% of its earnings in the form of a dividend. Luther Burbank pays out 16.2% 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. Commerce Bancshares has increased its dividend for 49 consecutive years. Luther Burbank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Commerce Bancshares and Luther Burbank’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Commerce Bancshares $1.26 billion 5.55 $319.38 million $2.77 23.75
Luther Burbank $181.74 million 3.87 $69.38 million $1.42 8.76

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

Profitability

This table compares Commerce Bancshares and Luther Burbank’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Commerce Bancshares 27.16% 13.21% 1.35%
Luther Burbank N/A N/A N/A

Summary

Commerce Bancshares beats Luther Burbank on 9 of the 14 factors compared between the two stocks.

Commerce Bancshares Company Profile

Commerce Bancshares, Inc. operates as the holding company for Commerce Bank that provides retail, mortgage banking, corporate, investment, trust, and asset management products and services to individuals and businesses. 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; personal mortgage banking; consumer installment lending; and consumer debit and credit bank cards, as well as provides online, mobile, and telephone banking services. The Commercial segment offers corporate lending, merchant and commercial bank card, leasing, international, and investment safekeeping and bond accounting services; and business products, government deposits, and related commercial cash management services, as well as sells fixed-income securities to individuals, corporations, correspondent banks, public institutions, and municipalities. The Wealth segment provides traditional trust and estate planning services, brokerage services, and advisory and discretionary investment management services, as well as manages a family of proprietary mutual funds, which are available for sale to trust and general retail customers. The company also offers private equity investment, securities brokerage, and insurance agency services. It operates through a network of 327 locations in Missouri, Kansas, Illinois, Oklahoma, and Colorado, as well as commercial offices. Commerce Bancshares, Inc. was founded in 1865 and is headquartered in Kansas City, Missouri.

Luther Burbank Company Profile

Luther Burbank Corporation operates as the bank holding company for Luther Burbank Savings that provides various banking products and services for individuals, entrepreneurs, professionals, and businesses in the United States. The company offers interest and noninterest-bearing transaction accounts, certificates of deposit, and money market accounts. It also provides commercial real estate loans, including first mortgage loans for the purchase, refinance, or build-out of tenant improvements on investor owned multifamily residential properties, as well as loans for the purchase, refinance, or improvement of office, retail, and light industrial properties; and single family residential loans. In addition, the company offers ATM machines, debit cards, and online and mobile banking services. As of January 25, 2018, it had nine banking branch locations in Northern and Southern California; and eight lending offices in California, Seattle, Washington, and Portland, Oregon. Further, the company engages in the real estate investment activities; and issues trust preferred securities. Luther Burbank Corporation was founded in 1983 and is headquartered in Santa Rosa, California.

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