Manferd Peterson, bank analyst, has been tasked with valuing Commerce Bancshares (CBSH), a regional bank headquartered in St. Louis, MO using relative valuation (price multiples). CBSH is currently trading for $39.53 per share. Peterson gathers the following data on CBSH and a set of comparable banks:

Company	Ticker	Price	EPS	RPS	BVPS	5-year growth (%)
Commerce Bank	CBSH	$39.53	$2.95	$11.46	$25.39	7.50
Huntington Bancshares	HBAN	$6.47	$0.62	$2.95	$6.13	5.00
UMB Bank	UMBF	$48.94	$3.09	$18.52	$30.89	10.00
US Bank	USB	$33.21	$2.72	$9.35	$17.45	7.75
Wells Fargo	WFC	$34.13	$2.90	$14.29	$26.06	10.00
Fifth Third Bancorp	FITB	$14.33	$1.56	$6.78	$14.56	5.00

Legend:

EPS = Earnings per share

RPS = Revenue per share

BVPS = Book Value per share

Peterson begins by estimating three values for CBSH stock using the mean P/E, P/S, and P/B ratios of the six banks. However, Peterson is aware that P/B is a dominant valuation metric in the banking industry, so Peterson arrives at a final estimate of value using a weighted average of 80% to the P/B value estimate, and 10% to each of the P/E and P/S value estimates.

Peterson notes that CBSH generated ROE of 12.25% for the most recent year. Peterson estimates a required return of 11% for CBSH using the CAPM.

Note: For all peer group means below, include CBSH in the calculation.

1.) What is the estimated intrinsic value of CBSH on a per share basis based on an application of the mean P/E multiple of the six banks to CBSHs EPS?

2.) What is the estimated intrinsic value of CBSH on a per share basis based on an application of the mean P/S multiple of the six banks to CBSHs RPS?

3.) What is the estimated intrinsic value of CBSH on a per share basis based on an application of the mean P/B multiple of the six banks to CBSHs BVPS?

4.) What is the estimated intrinsic value of CBSH based on Petersons weighted average final value estimate for CBSH shares? (1 point)

5.) Does CBSH appear overvalued, fairly valued or undervalued based on the mean PEG ratio for the six banks? (Hint: Need to first calculate the PEG ratio for CBSH)

6.) What is CBSHs justified P/B ratio?