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.
5 Reasons Why You Should Buy Comerica (CMA) Stock Now
Read MoreHide Full Article
Amid global headwinds, investors have been shying away from investing in the Finance industry. However, totally ignoring the sector is not wise as there are several companies with a decent performance history and strong fundamentals, signaling a profitable investment opportunity.
Comerica Incorporated (CMA - Free Report) is one such company that continues to reflect strength in several areas and adding the stock to your investment portfolio should not disappoint. Notably, the stock of this Dallas, Texas-based banking giant gained more than 40% over the past six months.
With assets over $71 billion, Comerica provides financial services in geographic markets including Texas, California, Michigan, as well as Arizona and Florida. Also, the firm has operations in numerous other U.S. states as well as in Canada and Mexico.
Steady Capital Deployment Activities: Comerica demonstrated its capital strength with the successful clearance of the Federal Reserve stress test and also won regulators’ approval for rewarding shareholders with dividends and potential share buybacks under 2016 capital plan. Notably last month, as part its capital plan, the company announced a 4.5% hike in quarterly cash dividend for common stock to 23 cents per share. Also, the company authorized an increase of the number of shares of common stock under its share repurchase program by up to 10 million additional shares.
Focus on Efficiency and Revenue Initiatives: After initial extensive review, management identified key actions under its ‘Growth in Efficiency and Revenue Initiative (GEAR Up)’. Such actions which are currently underway are anticipated to deliver additional annual pre-tax income of about $230 million by the year-end 2018. The company expects efficiency ratio to improve, declining to the low 60% range by the end of 2017, and at or below 60% by year-end 2018, without any increase in interest rates. Further, the initial actions will help in achieving a double-digit return on equity and an enhanced shareholder value.
Benign Energy Headwinds: The credit performance of the energy portfolio, which represents 5% of Comerica’s total loans (as of Jun 30, 2016), improved during the second-quarter 2016. Management remains cautious and believes the company is adequately reserved with reserve allocation of over 8% of energy loans as of Jun 30, 2016. We believe the pressure on company’s asset quality should ease with the stabilizing of oil and gas prices.
Strong Leverage: Comerica’s debt/equity ratio stands at 0.77, compared with the industry average of 0.93, indicating lower debt level relative to the industry. The financial stability of the company will help it perform better under volatile and unpredictable business environments.
Estimates Revisions: Over the past 30 days, the Zacks Consensus Estimate for Comerica increased 7.2% to $2.69 per share for 2016 and 8.7% to $3.49 per share for 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #1 (Strong Buy) for the stock.
Other Stocks to Consider
Some other favorably-ranked stocks in the finance space include Credit Acceptance Corp. (CACC - Free Report) , Hancock Holding Company , and HomeStreet, Inc. (HMST - Free Report) . All three stocks sport the same Zacks Rank as Comerica.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 Reasons Why You Should Buy Comerica (CMA) Stock Now
Amid global headwinds, investors have been shying away from investing in the Finance industry. However, totally ignoring the sector is not wise as there are several companies with a decent performance history and strong fundamentals, signaling a profitable investment opportunity.
Comerica Incorporated (CMA - Free Report) is one such company that continues to reflect strength in several areas and adding the stock to your investment portfolio should not disappoint. Notably, the stock of this Dallas, Texas-based banking giant gained more than 40% over the past six months.
With assets over $71 billion, Comerica provides financial services in geographic markets including Texas, California, Michigan, as well as Arizona and Florida. Also, the firm has operations in numerous other U.S. states as well as in Canada and Mexico.
COMERICA INC Price and Consensus
COMERICA INC Price and Consensus | COMERICA INC Quote
Why is the Stock an Attractive Pick?
Steady Capital Deployment Activities: Comerica demonstrated its capital strength with the successful clearance of the Federal Reserve stress test and also won regulators’ approval for rewarding shareholders with dividends and potential share buybacks under 2016 capital plan. Notably last month, as part its capital plan, the company announced a 4.5% hike in quarterly cash dividend for common stock to 23 cents per share. Also, the company authorized an increase of the number of shares of common stock under its share repurchase program by up to 10 million additional shares.
Focus on Efficiency and Revenue Initiatives: After initial extensive review, management identified key actions under its ‘Growth in Efficiency and Revenue Initiative (GEAR Up)’. Such actions which are currently underway are anticipated to deliver additional annual pre-tax income of about $230 million by the year-end 2018. The company expects efficiency ratio to improve, declining to the low 60% range by the end of 2017, and at or below 60% by year-end 2018, without any increase in interest rates. Further, the initial actions will help in achieving a double-digit return on equity and an enhanced shareholder value.
Benign Energy Headwinds: The credit performance of the energy portfolio, which represents 5% of Comerica’s total loans (as of Jun 30, 2016), improved during the second-quarter 2016. Management remains cautious and believes the company is adequately reserved with reserve allocation of over 8% of energy loans as of Jun 30, 2016. We believe the pressure on company’s asset quality should ease with the stabilizing of oil and gas prices.
Strong Leverage: Comerica’s debt/equity ratio stands at 0.77, compared with the industry average of 0.93, indicating lower debt level relative to the industry. The financial stability of the company will help it perform better under volatile and unpredictable business environments.
Estimates Revisions: Over the past 30 days, the Zacks Consensus Estimate for Comerica increased 7.2% to $2.69 per share for 2016 and 8.7% to $3.49 per share for 2017. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #1 (Strong Buy) for the stock.
Other Stocks to Consider
Some other favorably-ranked stocks in the finance space include Credit Acceptance Corp. (CACC - Free Report) , Hancock Holding Company , and HomeStreet, Inc. (HMST - Free Report) . All three stocks sport the same Zacks Rank as Comerica.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>