Contrasting Commerce Bancshares (NASDAQ:CBSH) and Bank OZK (NASDAQ:OZK)

Bank OZK (NASDAQ:OZK) 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 analyst recommendations, risk, earnings, profitability, institutional ownership, valuation and dividends.

Profitability

This table compares Bank OZK and Commerce Bancshares’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bank OZK	24.95%	11.87%	1.67%
Commerce Bancshares	26.07%	14.31%	1.71%

Valuation & Earnings

This table compares Bank OZK 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
Bank OZK	$1.74 billion	3.01	$715.48 million	$6.05	7.72
Commerce Bancshares	$1.90 billion	4.17	$566.25 million	$4.13	13.38

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

Insider and Institutional Ownership

86.2% of Bank OZK shares are owned by institutional investors. Comparatively, 70.3% of Commerce Bancshares shares are owned by institutional investors. 6.7% of Bank OZK shares are owned by insiders. Comparatively, 1.8% of Commerce Bancshares shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Bank OZK has a beta of 0.92, meaning that its share price is 8% less volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Bank OZK and Commerce Bancshares, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bank OZK	2	6	3	0	2.09
Commerce Bancshares	0	7	3	0	2.30

Bank OZK presently has a consensus price target of $54.86, suggesting a potential upside of 17.44%. Commerce Bancshares has a consensus price target of $64.71, suggesting a potential upside of 17.07%. Given Bank OZK’s higher possible upside, research analysts clearly believe Bank OZK is more favorable than Commerce Bancshares.

Dividends

Bank OZK pays an annual dividend of $1.92 per share and has a dividend yield of 4.1%. Commerce Bancshares pays an annual dividend of $1.10 per share and has a dividend yield of 2.0%. Bank OZK pays out 31.7% 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. Bank OZK has raised its dividend for 29 consecutive years and Commerce Bancshares has raised its dividend for 58 consecutive years.

Summary

Commerce Bancshares beats Bank OZK on 9 of the 16 factors compared between the two stocks.

About Bank OZK

Bank OZK provides various retail and commercial banking services for individuals and businesses in the United States. The company offers deposit services, including non-interest bearing checking, interest bearing transaction, business sweep, savings, money market, individual retirement, and other accounts, as well as time and reciprocal deposits. It also provides trust and wealth services, such as personal trusts, custodial accounts, investment management accounts, and retirement accounts, as well as corporate trust services, including trustee, paying agent and registered transfer agent services, and other related services. In addition, the company offers treasury management services comprising automated clearing house, wire transfer, transaction reporting, wholesale lockbox, remote deposit capture, automated credit line transfer, reconciliation, positive pay, commercial card, and other services, as well as zero balance and investment sweep accounts. Further, it provides real estate, consumer, small business, indirect recreational vehicle and marine, equipment, agricultural, commercial and industrial, government guaranteed, lines of credit, homebuilder, and affordable housing loans; lender and structured, business aviation, and subscription financing services; and mortgage and other lending products. Additionally, the company offers ATMs; telephone, online, and mobile banking services; credit and debit cards; safe deposit boxes; and other products and services. The company was formerly known as Bank of the Ozarks and changed its name to Bank OZK in July 2018. Bank OZK was founded in 1903 and is headquartered in Little Rock, Arkansas.

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.