Commerce Bancshares, Inc. (NASDAQ:CBSH) shows a ROIC of 0.65% and a WACC of 11.63%, indicating it struggles to cover its cost of capital.
UMB Financial Corporation (UMBF) outperforms with a ROIC of 75.04% and a WACC of 24.09%, showcasing high efficiency in generating returns.
Comparative analysis with peers like BOK Financial Corporation (BOKF) and Community Trust Bancorp, Inc. (CTBI) reveals CBSH’s lower capital utilization efficiency.
Commerce Bancshares, Inc. (NASDAQ:CBSH) is a regional bank holding company based in Missouri, offering a variety of financial services such as personal banking, business banking, and wealth management. CBSH primarily operates in the Midwest, competing with regional banks like UMB Financial Corporation (UMBF) and BOK Financial Corporation (BOKF).
In evaluating CBSH’s financial performance, the Return on Invested Capital (ROIC) and Weighted Average Cost of Capital (WACC) are crucial metrics. CBSH has a ROIC of 0.65% and a WACC of 11.63%, resulting in a ROIC to WACC ratio of 0.056. This indicates that CBSH is not generating sufficient returns to cover its cost of capital, which could impact its financial health.
Comparatively, UMB Financial Corporation (UMBF) exhibits a robust ROIC of 75.04% against a WACC of 24.09%, yielding a ROIC to WACC ratio of 3.115. This suggests UMBF is highly efficient in generating returns, making it a strong performer among its peers. Such efficiency can lead to better growth prospects and shareholder value.
BOK Financial Corporation (BOKF) and Community Trust Bancorp, Inc. (CTBI) also show better ROIC to WACC ratios than CBSH, at 0.070 and 0.075 respectively. These figures suggest that both companies are more effective in utilizing their capital compared to CBSH, which may need to reassess its strategies to improve its financial metrics.
Lancaster Colony Corporation (LANC), although not a direct competitor, demonstrates a strong ROIC to WACC ratio of 2.146. This indicates efficient capital utilization, highlighting the importance of balancing returns and costs for financial success. CBSH could benefit from examining such strategies to enhance its capital efficiency.
