Will Commerce Bancshares (CBSH) Disappoint Again? - Analyst Blog
April 09 2014 - 10:00AM
Zacks
Commerce Bancshares, Inc. (CBSH) is slated to
release first-quarter 2014 results on Apr 10, before the opening
bell.
In fourth-quarter 2013, Commerce Bancshares had missed the Zacks
Consensus estimate by 2.82%. Results suffered due to a fall in net
interest income and higher operating expenses. Nevertheless, lower
provision for loan losses and rise in non-interest income partially
offset the negatives.
Can the Kansas, MO-based bank deliver earnings beat this quarter?
Or will it disappoint again? Let us see how things have shaped up
for this announcement.
Factors to Affect Q1 Results
The overall market condition will play a major role in driving
Commerce Bancshares’ results in the first quarter. The interest
rate scenario remained practically unchanged and the pressure on
net interest income (NII) continued. Therefore, we anticipate
Commerce Bancshares to report subdued NII growth for the
quarter.
Moreover, we do not expect any substantial fall in expenses for
Commerce Bancshares. During the quarter, the company did not
announce any cost control program to reduce expenses. Nevertheless,
absence of acquisition and merger deals narrows down the chances of
a further increase in expenses.
On the flip side, with the Federal Reserve initiating tapering
earlier this year, long-term rates are expected to improve. Though
the effect of the same will not be felt any time soon, it is a sign
of economic recovery. Revival of investors’ confidence in the
market is likely to have supported Commerce Bancshares’s fee income
during the said quarter.
Moreover, toward the end of January, Commerce Bancshares declared a
5% hike in its regular dividend payout to 22.5 cents per share.
This reflects a strong balance position, which will back the
company’s first-quarter earnings.
Nevertheless, the initiatives by Commerce Bancshares to improve
profitability have failed to impress analysts. As a result, the
Zacks Consensus Estimate for the quarter remained stable at 68
cents per share over the last 7 days.
Earnings Whispers
Our proven model does not conclusively show Commerce Bancshares as
likely to beat the Zacks Consensus Estimate in the first quarter.
That is because a stock needs to have both a positive Earnings ESP
and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to
happen. Unfortunately, this is not the case here as elaborated
below.
Zacks ESP: The Earnings ESP for Commerce
Bancshares is 0.00%. This is because the Most Accurate estimate and
the Zacks Consensus Estimate stand at 68 cents.
Zacks Rank: Commerce Bancshares’ Zacks Rank #2
increases the predictive power of ESP. However, we also need to
have a positive ESP to be confident of an earnings surprise call.
Stocks to Consider
Here are some banking stocks that you may want to consider as our
model shows that these have the right combination of elements to
post an earnings beat this quarter.
First Interstate Bancsystem Inc. (FIBK) has an
earnings ESP of +2.27% and a Zacks Rank #3. It is scheduled to
report first-quarter results on Apr 23.
The earnings ESP for Wintrust Financial
Corporation (WTFC) is +1.49% and it carries a Zacks Rank
#2. The company is expected to release first-quarter results on Apr
15.
The PNC Financial Services Group, Inc. (PNC) has
an earnings ESP of +1.21% and a Zacks Rank #3. It is slated to
report first-quarter results on Apr 16.
COMMERCE BANCSH (CBSH): Free Stock Analysis Report
FIRST INTST MT (FIBK): Free Stock Analysis Report
PNC FINL SVC CP (PNC): Free Stock Analysis Report
WINTRUST FINL (WTFC): Free Stock Analysis Report
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