Head to Head Analysis: Canadian Imperial Bank of Commerce (NYSE:CM) versus Independent Bank (NASDAQ:IBCP)

Independent Bank (NASDAQ:IBCP) and Canadian Imperial Bank of Commerce (NYSE:CM) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, analyst recommendations, institutional ownership, profitability, risk, earnings and dividends.

Dividends

Independent Bank pays an annual dividend of $1.12 per share and has a dividend yield of 3.1%. Canadian Imperial Bank of Commerce pays an annual dividend of $3.09 per share and has a dividend yield of 2.6%. Independent Bank pays out 32.9% of its earnings in the form of a dividend. Canadian Imperial Bank of Commerce pays out 41.3% 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. Independent Bank has raised its dividend for 11 consecutive years and Canadian Imperial Bank of Commerce has raised its dividend for 14 consecutive years. Independent Bank is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

79.4% of Independent Bank shares are owned by institutional investors. Comparatively, 49.9% of Canadian Imperial Bank of Commerce shares are owned by institutional investors. 5.9% of Independent Bank shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Independent Bank and Canadian Imperial Bank of Commerce”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Independent Bank	$315.38 million	2.57	$68.54 million	$3.40	10.76
Canadian Imperial Bank of Commerce	$44.36 billion	2.39	$6.02 billion	$7.49	15.57

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

Analyst Ratings

This is a summary of current ratings and price targets for Independent Bank and Canadian Imperial Bank of Commerce, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Independent Bank	0	2	3	0	2.60
Canadian Imperial Bank of Commerce	0	5	4	1	2.60

Independent Bank currently has a consensus target price of $41.00, suggesting a potential upside of 12.11%. Canadian Imperial Bank of Commerce has a consensus target price of $160.00, suggesting a potential upside of 37.19%. Given Canadian Imperial Bank of Commerce’s higher possible upside, analysts plainly believe Canadian Imperial Bank of Commerce is more favorable than Independent Bank.

Risk and Volatility

Independent Bank has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500. Comparatively, Canadian Imperial Bank of Commerce has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Profitability

This table compares Independent Bank and Canadian Imperial Bank of Commerce’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Independent Bank	21.63%	14.57%	1.34%
Canadian Imperial Bank of Commerce	16.09%	17.02%	0.87%

Summary

Canadian Imperial Bank of Commerce beats Independent Bank on 10 of the 17 factors compared between the two stocks.

About Independent Bank

Independent Bank Corporation operates as the bank holding company for Independent Bank that provides commercial banking services to individuals and businesses in rural and suburban communities in Michigan. It offers checking and savings accounts, commercial lending, direct and indirect consumer financing, mortgage lending, and safe deposit box services. The company also provides title insurance services and investment services, as well as automatic teller machines, and internet and mobile banking services. In addition, it operates through branches, drive-thru facilities, and loan production offices. Independent Bank Corporation was founded in 1864 and is based in Grand Rapids, Michigan.

About Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally. The company operates through Canadian Personal and Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; Capital Markets and Direct Financial Services; and Corporate and Other segments. It offers checking, savings, and business accounts; mortgages; business, car, and other loans; lines of credit, student lines of credit, and agriculture loans; and small business financing and overdraft protection services. The company also provides investment and insurance services; credit cards; and ATMs, as well as mobile, online, and global money and wire transfer services. Canadian Imperial Bank of Commerce was founded in 1867 and is headquartered in Toronto, Canada.