Merchants Bancorp (NASDAQ:MBIN) & Commerce Bancshares (NASDAQ:CBSH) Head-To-Head Analysis

Merchants Bancorp (NASDAQ:MBIN) and Commerce Bancshares (NASDAQ:CBSH) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, earnings, institutional ownership, analyst recommendations, profitability, dividends and risk.

Profitability

This table compares Merchants Bancorp and Commerce Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Merchants Bancorp	19.80%	15.29%	1.34%
Commerce Bancshares	26.07%	14.31%	1.71%

Risk & Volatility

Merchants Bancorp has a beta of 1.14, indicating that its share price is 14% more volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500.

Insider and Institutional Ownership

24.6% of Merchants Bancorp shares are owned by institutional investors. Comparatively, 70.3% of Commerce Bancshares shares are owned by institutional investors. 44.9% of Merchants Bancorp shares are owned by company insiders. Comparatively, 1.8% of Commerce Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Merchants Bancorp and Commerce Bancshares”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Merchants Bancorp	$1.37 billion	1.77	$218.77 million	$4.98	10.58
Commerce Bancshares	$2.14 billion	3.92	$566.25 million	$4.13	14.13

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

Dividends

Merchants Bancorp pays an annual dividend of $0.44 per share and has a dividend yield of 0.8%. Commerce Bancshares pays an annual dividend of $1.10 per share and has a dividend yield of 1.9%. Merchants Bancorp pays out 8.8% of its earnings in the form of a dividend. Commerce Bancshares pays out 26.6% 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. Merchants Bancorp has increased its dividend for 8 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.

Analyst Ratings

This is a summary of current recommendations and price targets for Merchants Bancorp and Commerce Bancshares, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Merchants Bancorp	0	1	3	1	3.00
Commerce Bancshares	0	7	3	0	2.30

Merchants Bancorp currently has a consensus target price of $51.50, suggesting a potential downside of 2.24%. Commerce Bancshares has a consensus target price of $63.29, suggesting a potential upside of 8.42%. Given Commerce Bancshares’ higher possible upside, analysts clearly believe Commerce Bancshares is more favorable than Merchants Bancorp.

Summary

Commerce Bancshares beats Merchants Bancorp on 10 of the 17 factors compared between the two stocks.

About Merchants Bancorp

Merchants Bancorp operates as the diversified bank holding company in the United States. It operates through three segments: Multi-family Mortgage Banking, Mortgage Warehousing, and Banking. The Multi-family Mortgage Banking segment engages in the mortgage banking, which originates and services government sponsored mortgages, including bridge financing products to refinance, acquire, or reposition multi-family housing projects, and construction lending for multi-family and healthcare facilities. This segment also offers customized loan products for need-based skilled nursing facilities, such as independent living, assisted living, and memory care; and tax credit equity syndicator service. The Mortgage Warehousing segment funds agency eligible residential loans, as well as commercial loans to non-depository financial institutions. The Banking segment offers a range of financial products and services to consumers and businesses, which includes retail banking, commercial lending, agricultural lending, retail and correspondent residential mortgage banking, and small business administration lending. Merchants Bancorp was founded in 1990 and is headquartered in Carmel, Indiana.

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.