We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
7 Reasons to Invest in Comerica Incorporated (CMA) Right Now
Read MoreHide Full Article
In the Q2 earnings season, the Finance sector turned out to be one of the best performers. Particularly, benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Moreover, lower commercial tax rate are likely to boost banks’ profitability further.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made the companies optimistic of future earnings growth and raised investors’ sentiments as well. So, we thought of picking a stock from the sector that reflects strong fundamentals and has solid long-term growth opportunities.
Comerica Incorporated (CMA - Free Report) is one such stock that not only beat estimates this season, but has also been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 30 days, the Zacks Consensus Estimate for 2018 and 2019 inched up around 1% and 1.9%, respectively.
Further, shares of this Zacks Rank #1 (Strong Buy) company have gained around 14.4% year to date, outperforming 1.1% growth recorded by the industry.
Notably, Comerica has a number of other aspects that make it an attractive investment option.
Why Comerica is an Attractive Pick
Revenue Strength: Comerica continues to make steady progress toward improving its top line. Sales witnessed a 6% compounded annual growth rate (CAGR) over the last five years (2013-2017), with the trend continuing in the first six months of 2018 as well. Also, the company’s projected sales growth (F1/F0) of 6.02% (as against the industry average of about 5.06%) indicates constant upward momentum in revenues.
Earnings Growth: Comerica has witnessed earnings growth of 12.86% in the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 22.4% promises rewards for investors over the long run. Additionally, it recorded an average positive earnings surprise of 7.41% in the preceding four quarters.
Prudent Expense Management: Expenses dropped 3.6% in 2017 due to Comerica’s focus on driving long-term efficiency through GEAR Up initiatives. Such initiatives are anticipated to deliver annual pre-tax income of about $270 million by year-end 2018, and additional benefits in pre-tax income of $35 million in 2019 and beyond.
Steady Capital Deployment Activities: In July 2018, the board of directors hiked the quarterly dividend by 76% and approved a plan to repurchase up to $500 million in common shares — a record for a single quarter. Earlier, this June, the Federal Reserve exempted bank-holding companies with less than $100 billion in total assets from both the Dodd-Frank Act stress tests, and Comprehensive Capital Analysis and Review. Therefore, Comerica got the exemption.
Strong Leverage: Comerica’s debt/equity ratio is valued at 0.69 compared to the industry average of 0.92, indicating a relatively lower debt burden. It also highlights the financial stability of the company despite an unstable economic environment.
Superior Return on Equity (ROE): Comerica’s ROE of 13.14% compared with the industry average of 11.60% underlines the company’s commendable position over its peers.
Stocks to Consider
SunTrust Banks, Inc. (STI - Free Report) has been witnessing upward estimate revisions, for the last 60 days. Year to date, the company’s share price has been up more than 14%. It currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KeyCorp (KEY - Free Report) has been witnessing upward estimate revisions for the last 60 days. In addition, the stock jumped more than 7% so far, this year. It currently carries a Zacks Rank of 2 (Buy).
M&T Bank Corporation (MTB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 2.7% year to date. It currently carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
7 Reasons to Invest in Comerica Incorporated (CMA) Right Now
In the Q2 earnings season, the Finance sector turned out to be one of the best performers. Particularly, benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Moreover, lower commercial tax rate are likely to boost banks’ profitability further.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made the companies optimistic of future earnings growth and raised investors’ sentiments as well. So, we thought of picking a stock from the sector that reflects strong fundamentals and has solid long-term growth opportunities.
Comerica Incorporated (CMA - Free Report) is one such stock that not only beat estimates this season, but has also been witnessing upward estimate revisions, reflecting analysts’ optimism about its future prospects. Over the last 30 days, the Zacks Consensus Estimate for 2018 and 2019 inched up around 1% and 1.9%, respectively.
Further, shares of this Zacks Rank #1 (Strong Buy) company have gained around 14.4% year to date, outperforming 1.1% growth recorded by the industry.
Notably, Comerica has a number of other aspects that make it an attractive investment option.
Why Comerica is an Attractive Pick
Revenue Strength: Comerica continues to make steady progress toward improving its top line. Sales witnessed a 6% compounded annual growth rate (CAGR) over the last five years (2013-2017), with the trend continuing in the first six months of 2018 as well. Also, the company’s projected sales growth (F1/F0) of 6.02% (as against the industry average of about 5.06%) indicates constant upward momentum in revenues.
Earnings Growth: Comerica has witnessed earnings growth of 12.86% in the last three-five years. In addition, the company’s long-term (three-five years) estimated EPS growth rate of 22.4% promises rewards for investors over the long run. Additionally, it recorded an average positive earnings surprise of 7.41% in the preceding four quarters.
Prudent Expense Management: Expenses dropped 3.6% in 2017 due to Comerica’s focus on driving long-term efficiency through GEAR Up initiatives. Such initiatives are anticipated to deliver annual pre-tax income of about $270 million by year-end 2018, and additional benefits in pre-tax income of $35 million in 2019 and beyond.
Steady Capital Deployment Activities: In July 2018, the board of directors hiked the quarterly dividend by 76% and approved a plan to repurchase up to $500 million in common shares — a record for a single quarter. Earlier, this June, the Federal Reserve exempted bank-holding companies with less than $100 billion in total assets from both the Dodd-Frank Act stress tests, and Comprehensive Capital Analysis and Review. Therefore, Comerica got the exemption.
Strong Leverage: Comerica’s debt/equity ratio is valued at 0.69 compared to the industry average of 0.92, indicating a relatively lower debt burden. It also highlights the financial stability of the company despite an unstable economic environment.
Superior Return on Equity (ROE): Comerica’s ROE of 13.14% compared with the industry average of 11.60% underlines the company’s commendable position over its peers.
Stocks to Consider
SunTrust Banks, Inc. (STI - Free Report) has been witnessing upward estimate revisions, for the last 60 days. Year to date, the company’s share price has been up more than 14%. It currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
KeyCorp (KEY - Free Report) has been witnessing upward estimate revisions for the last 60 days. In addition, the stock jumped more than 7% so far, this year. It currently carries a Zacks Rank of 2 (Buy).
M&T Bank Corporation (MTB - Free Report) has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 2.7% year to date. It currently carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>