Commerce Bancshares (Commerce Bancshares) Predictability Rank

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What is Commerce Bancshares Predictability Rank?

Warren Buffett said many times that the companies he likes are:

1. Simple businesses that he understands
2. that have predictable and proven earnings and
3. with economic moat
4. those can be bought at a reasonable price.

It is hard to quantify "simple businesses that he (Buffett) understands", so we will focus on the other three characteristics instead. In GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank, we will show that the businesses that have predictable and proven earnings are usually also simple businesses that an average person could understand.

GuruFocus conducted a back test study of Warren Buffett's strategy of "buying good companies at fair prices" for the years from 1998-2008.

Commerce Bancshares Predictability Rank Calculation

In our database there are 2403 stocks that have been traded from Jan. 2, 1998 to Aug. 31, 2008. We have the complete 10-year financial data and trading prices of these companies for this period. We rank the predictability of these companies based on the consistency of their revenue per share and EBITDA (earning before interest, tax, depreciation and amortization) per share over the past ten fiscal years, and study the correlation between the stock performances and the predictability of the business.

Our study may be subject to these biases and assumptions:

Dividend yields are not counted for investment returns
Effects of price changes due to spin-offs may not be fully adjusted
Study is subjected to survivorship bias due to de-listing, bankruptcy, LBO, M&A, etc.

The correlation between business predictability and investment returns of a company is showed below.

Correlation Between Business Predictability and Investment Returns

	Predictables	Non-Predictable	All stocks
Total Number of stocks	570	1833	2403
Total Lost Money	61	830	891
Total Lost More Than 50%	18	412	430
Total Lost More Than 90%	4	86	90
Average Gain	260.6%	100.0%	138.1%
Median Gain	150.0%	13.0%	39.0%
Maximum Gain	2852.0%	11483.0%	11483.0%
Maximum Loss	-100.0%	-100.0%	-100.0%
Annualized Average Gain	12.7%	6.7%	8.4%
Annualized Median Gain	8.9%	1.1%	3.1%

For the 570 predictable companies, we have seen strong correlation between the predictability of businesses and the stock performances over the past 10 years, regardless of the valuation of business at 1998. Accordingly, we have ranked the business predictability from 5-star to 1-star, as shown in this table.

Predictability Rank	5-Star	4.5-Star	4-Star	3.5-Star	3-Star	2.5-Star	2-Star	1-Star (non-predictable)	Average among all
% Out of All 2403 Stocks	3.3%	2.9%	3.7%	3.3%	3.3%	3.7%	3.3%	76.3%	100%
% that are in Loss (10y)	3%	10%	8%	9%	11%	18%	16%	45%	37%
Average Gain (10y)	364.6%	330.9%	278.0%	235.1%	243.5%	227.8%	154.8%	100.0%	138.1%
Median Gain (10y)	238.5%	193.5%	171.0%	159.0%	132.5%	113.5%	87.0%	13.0%	39.0%
Maximum Gainer	2228.0%	2547.0%	2452.0%	2852.0%	2432.0%	1892.0%	1807.0%	11483.0%	11483.0%
Maximum Loser	-82.0%	-53.0%	-67.0%	-100.0%	-83.0%	-100.0%	-78.0%	-100.0%	-100.0%
Annualized Average Gain	15.4%	14.6%	13.2%	12.0%	12.2%	11.7%	9.1%	6.7%	8.4%
Annualized Median Gain	12.1%	10.6%	9.8%	9.3%	8.2%	7.3%	6.0%	1.1%	3.1%

For detailed information about each predictability rank, please go to GuruFocus Research: What worked in the market from 1998-2008? Part I: Introduction of Predictability Rank

Commerce Bancshares Predictability Rank Related Terms

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Commerce Bancshares (Commerce Bancshares) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Financial Services » Banks » Commerce Bancshares Inc (NAS:CBSH) » Definitions » Predictability Rank

Comparable Companies

Traded in Other Exchanges

CB5:Germany

Address

1000 Walnut, Kansas City, MO, USA, 64106

Website

https://www.commercebank.com

Commerce Bancshares Inc. is a $22 billion regional bank that provides a diversified line of financial services, including business and personal banking, wealth management, financial planning, and investments through its affiliated companies. Commerce Bank operates in more than 200 locations in the central United States. Commerce Bancshares also has operating subsidiaries involved in mortgage banking, leasing, credit-related insurance, venture capital, and real estate activities.

Executives

David W Kemper	director, officer: Chairman, CEO and President	PO BOX 419248, KANSAS CITY MO 64141-6248
Blackford F Brauer	director	P.O. BOX 419248, KANSAS CITY MO 64141-6248
Paula S Petersen	officer: Senior Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
Patricia R Kellerhals	officer: Senior Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
Derrick Brooks	officer: Senior Vice President	COMMERCE BANK, PO BOX 419248, KANSAS CITY MO 64141-6248
Douglas D Neff	officer: Senior Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
John W Kemper	officer: Senior Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
David L. Roller	officer: Senior Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
Rassieur Benjamin F Iii	director	PO BOX 419248, KANSAS CITY MO 64141-6248
Thomas J Noack	officer: Senior Vice President	P.O. BOX 419248, KANSAS CITY MO 64141-6248
Robert S Holmes	officer: Executive Vice President	PO BOX 419248, KANSAS CITY MO 64141-6248
William Kyle Chapman	director	P.O. BOX 419248, KANSAS CITY MO 64141-6248
Christine B Taylor-broughton	director	P.O. BOX 419248, KANSAS CITY MO 64141-6248
June Mcallister Fowler	director	P.O. BOX 419248, KANSAS CITY MO 64141-6248
Kim L Jakovich	officer: Senior Vice President	P.O. BOX 419248, KANSAS CITY MO 64141-6248