Back to top

Will Comerica (CMA) Beat Earnings Estimates Again?

Read MoreHide Full Article

Comerica Incorporated (CMA - Free Report) is scheduled to report its second-quarter 2014 results before the opening bell on Jul 15.

Comerica continued its earning streak by delivering the fifth consecutive earnings beat in first-quarter 2014. Lower provision and prudent expense management drove earnings per share of 73 cents, outpacing the Zacks Consensus Estimate by a penny.

Will Comerica be able to keep the earnings streak alive in this quarter as well? Let’s see how things have shaped up for this announcement.

Factors to Influence Q2 Results

Amid a competitive environment, shift in the portfolio mix towards lower yielding loans as well as lower reinvestment rates for the securities portfolio should keep Comerica’s net interest margin (NIM) under pressure in this quarter as well. The company has experienced persistent decline in NIM since 2011 and has not been able to reverse the trend in the recent quarters. The low interest-rate environment, coupled with reduced purchase accounting accretion, is expected to add further stress on NIM.

Given the downward trend in net interest income, banks are making efforts to boost non-interest income and some have been able to succeed. However, Comerica is facing challenges in maintaining steady growth in its non interest income.

Lower consumer and business spending due to the sluggish economic recovery has impacted Comerica’s non-interest income, which remained volatile since the last few quarters. As the company has not revealed any measures to counter issues, we apprehend that continuation of the same in the second quarter.

Among others factors, weak loan growth and stringent regulatory norms could act as dampeners for the company’s financials.

However, Comerica has some encouraging traits that may favorably support its results. These include its efforts to improve asset quality and reduce expenses.

Activities of Comerica during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained stable at 76 cents per share over the last 7 days.

Earnings Whispers

Our proven model does not conclusively show that Comerica is likely to beat the Zacks Consensus Estimate in the second quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy) or at least #2 (Buy) or #3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below.

Zacks ESP:  The Earnings ESP for Comerica is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 76 cents per share.

Zacks Rank: Comerica’s Zacks Rank #2 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings surprise call.

Stocks That Warrant a Look

Here are some stocks you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

The earnings ESP for The PNC Financial Services Group, Inc. (PNC - Free Report) is +0.57% and it carries a Zacks Rank #3. The company is scheduled to release its second-quarter results on Jul 16.

Fifth Third Bancorp (FITB - Free Report) has an earnings ESP of +4.44% and carries a Zacks Rank #3. It is scheduled to report its second-quarter results on Jul 17.

Capital One Financial Corporation (COF - Free Report) has an earnings ESP of +1.12% and carries a Zacks Rank #2. It is expected to report its second-quarter results on Jul 17.

More from Zacks Analyst Blog

You May Like