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

Dividends

Midland States Bancorp pays an annual dividend of $0.97 per share and has a dividend yield of 3.8%. Commerce Bancshares pays an annual dividend of $1.04 per share and has a dividend yield of 1.8%. Midland States Bancorp pays out 47.5% of its earnings in the form of a dividend. Commerce Bancshares pays out 27.5% 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. Midland States Bancorp has increased its dividend for 2 consecutive years and Commerce Bancshares has increased its dividend for 50 consecutive years.

Profitability

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

Net Margins Return on Equity Return on Assets
Midland States Bancorp 17.52% 10.14% 1.10%
Commerce Bancshares 29.90% 15.02% 1.69%

Insider & Institutional Ownership

48.0% of Midland States Bancorp shares are held by institutional investors. Comparatively, 63.2% of Commerce Bancshares shares are held by institutional investors. 12.7% of Midland States Bancorp shares are held by insiders. Comparatively, 3.6% of Commerce Bancshares shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Midland States Bancorp and Commerce Bancshares, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Midland States Bancorp 0 0 1 0 3.00
Commerce Bancshares 2 3 0 0 1.60

Midland States Bancorp presently has a consensus price target of $27.00, suggesting a potential upside of 5.51%. Commerce Bancshares has a consensus price target of $60.09, suggesting a potential upside of 4.15%. Given Midland States Bancorp’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Midland States Bancorp is more favorable than Commerce Bancshares.

Risk and Volatility

Midland States Bancorp has a beta of 1.36, suggesting that its share price is 36% more volatile than the S&P 500. Comparatively, Commerce Bancshares has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500.

Valuation & Earnings

This table compares Midland States Bancorp and Commerce Bancshares’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Midland States Bancorp $295.36 million 2.13 $39.42 million $2.04 12.54
Commerce Bancshares $1.39 billion 4.55 $433.54 million $3.78 15.26

Commerce Bancshares has higher revenue and earnings than Midland States Bancorp. Midland States 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.

Summary

Commerce Bancshares beats Midland States Bancorp on 11 of the 17 factors compared between the two stocks.

About Midland States Bancorp

Midland States Bancorp, Inc. operates as a financial holding company for Midland States Bank that provides various banking products and services to individuals, businesses, municipalities, and other entities. It operates through Banking, Commercial FHA Origination and Servicing, Wealth Management, and Other segments. The company accepts various deposits, such as checking, savings, money market, and sweep accounts, as well as certificates of deposit, noninterest-bearing and interest-bearing demand deposits, and time deposits. Its loan portfolio include commercial lending products consisting of owner occupied commercial real estate, commercial real estate investment, real estate construction, and multifamily loans, as well as loans to purchase farmland and finance agricultural production; business term loans, equipment financing, and lines of credit; consumer installment loans for purchase cars, boats, other recreational vehicles, and appliances, as well as other home improvement projects; and residential first and second mortgage loans, and home equity lines of credit. The company also originates residential mortgage loans; and commercial mortgage loans for multifamily and healthcare facilities. In addition, it provides trust and wealth management products and services, including financial and estate planning, trustee and custodial services, investment management, tax and insurance planning, business planning, corporate retirement plan consulting and administration, and retail brokerage services. Further, the company offers commercial equipment leasing and merchant services. As of December 31, 2018, it operated 69 banking offices in 48 communities within its market areas, such as Illinois and the St. Louis metropolitan areas. The company was founded in 1881 and is headquartered in Effingham, Illinois.

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. 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 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. The company also offers private equity investment, securities brokerage, and insurance agency services. It operates through a network of 320 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.

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