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Key Factors to Know Ahead of Comerica's (CMA) Q1 Earnings?
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Comerica Incorporated (CMA - Free Report) is scheduled to report first-quarter 2023 results on Apr 20, before the opening bell. The bank’s revenues and earnings are likely to have increased from the year-ago quarter’s reported figure.
Comerica’s earnings for fourth-quarter 2022 surpassed the Zacks Consensus Estimate. Results were primarily aided by increased net interest income (NII), supported by higher interest rates and loan growth. However, a decline in non-interest income, higher expenses and increased provisions acted as dampeners.
CMA has a decent surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed once, the average beat being 2.43%.
CMA’s activities in the to-be-reported quarter were inadequate to instill analysts’ confidence in the stock. The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.26 per share, revised marginally down in the past week. Nonetheless, the estimate indicates a 64.96% rise from the year-ago quarter’s reported figure.
The consensus estimate for revenues is pegged at $966.4 million, suggesting growth of 38.06% from the year-ago quarter’s reported number.
Factors at Play
Net Interest Income (NII): Per the Fed’s latest data, growth in commercial and industrial loans declined during the quarter. Further, it has been observed that the pace of loan growth across most categories slowed in comparison with the prior few quarters due to the heightening recession fears and turmoil in the banking space. The Zacks Consensus Estimate of $75.5 billion for average interest-earning assets indicates a marginal decline from the last reported figure.
Nonetheless, during the quarter, commercial real estate loans and consumer loans in the United States witnessed moderate loan growth. This is likely to have improved the loan balances of CMA during the first-quarter as most of its loan portfolio comprises commercial loans. Management expects average loan balances to increase sequentially to $53.1 billion.
Federal Reserve hiked rates by 50 basis points in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. With such successive rate hikes, the positive impact of high interest rates on the company’s NII is anticipated to have been limited.
Management expects NII to decrease 3-6% sequentially. The consensus mark for NII suggests a 5.12% fall from the prior-quarter’s reported number to $704 million.
Fee Income: The rising rates and high inflation are expected to have increased card use and thereby card fees in the quarter. Comerica’s card fees are major contributors to its fee income, hence, it is likely to have aided fee income growth during first-quarter 2023. The Zacks Consensus Estimate for card fees is pegged at $68 million, indicating no change from the prior-quarter’s reported number.
The consensus estimate of $23.66 million for commercial lending fees suggests a 15.5% decline from the prior-quarter’s reported figure.
Management expects average deposit balance to have declined to $69 billion indicating that the customers have been utilizing balances to fund business activities during the quarter. This is likely to have affected the revenues from service charges on deposit accounts. The Zacks Consensus Estimate of $45.99 million for service charges on deposit accounts indicates a 2.1% fall from the prior-quarter’s reported number.
The consensus estimate of $266 million for overall fee income suggests a 4.3% decline from the last reported figure.
Expenses: The company has been investing in its technology platform owing to its business initiatives. It is expected to have incurred higher expenses due to rising salaries on account of inflation as well as higher revenue-related costs. Such rising costs are estimated to have weighed on its expense base to some extent in the quarter under review and hindered bottom-line growth.
Asset Quality: With decent loan growth, expectations of a worsening macroeconomic outlook and growing recession fears, CMA is expected to have set aside more money to cover expected loan losses in the first quarter. In fourth-quarter 2022, the company increased allowance for credit losses sequentially by $15 million to $624 million. The increasing momentum is expected to have continued in the first quarter as well.
What Our Model Predicts
Our proven model does not predict an earnings beat for Comerica this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Comerica has an Earnings ESP of -1.25%.
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post earnings beat in their upcoming releases, per our model.
The Bank of New York Mellon (BK - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 18. BK carries a Zacks Rank #3 at present and has an Earnings ESP of +2.29%.
Commerce Bancshares (CBSH - Free Report) is slated to report first-quarter 2022 results on Apr 18. CBSH carries a Zacks Rank #3 at present and has an Earnings ESP of +2.46%.
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Key Factors to Know Ahead of Comerica's (CMA) Q1 Earnings?
Comerica Incorporated (CMA - Free Report) is scheduled to report first-quarter 2023 results on Apr 20, before the opening bell. The bank’s revenues and earnings are likely to have increased from the year-ago quarter’s reported figure.
Comerica’s earnings for fourth-quarter 2022 surpassed the Zacks Consensus Estimate. Results were primarily aided by increased net interest income (NII), supported by higher interest rates and loan growth. However, a decline in non-interest income, higher expenses and increased provisions acted as dampeners.
CMA has a decent surprise history. Its earnings surpassed estimates in three of the trailing four quarters and missed once, the average beat being 2.43%.
Comerica Incorporated Price and EPS Surprise
Comerica Incorporated price-eps-surprise | Comerica Incorporated Quote
CMA’s activities in the to-be-reported quarter were inadequate to instill analysts’ confidence in the stock. The Zacks Consensus Estimate for first-quarter earnings is pegged at $2.26 per share, revised marginally down in the past week. Nonetheless, the estimate indicates a 64.96% rise from the year-ago quarter’s reported figure.
The consensus estimate for revenues is pegged at $966.4 million, suggesting growth of 38.06% from the year-ago quarter’s reported number.
Factors at Play
Net Interest Income (NII): Per the Fed’s latest data, growth in commercial and industrial loans declined during the quarter. Further, it has been observed that the pace of loan growth across most categories slowed in comparison with the prior few quarters due to the heightening recession fears and turmoil in the banking space. The Zacks Consensus Estimate of $75.5 billion for average interest-earning assets indicates a marginal decline from the last reported figure.
Nonetheless, during the quarter, commercial real estate loans and consumer loans in the United States witnessed moderate loan growth. This is likely to have improved the loan balances of CMA during the first-quarter as most of its loan portfolio comprises commercial loans. Management expects average loan balances to increase sequentially to $53.1 billion.
Federal Reserve hiked rates by 50 basis points in the to-be-reported quarter and 25 bps in fourth-quarter 2022. With this, the policy rate reached 4.75-5% in March 2023, the highest since 2008. With such successive rate hikes, the positive impact of high interest rates on the company’s NII is anticipated to have been limited.
Management expects NII to decrease 3-6% sequentially. The consensus mark for NII suggests a 5.12% fall from the prior-quarter’s reported number to $704 million.
Fee Income: The rising rates and high inflation are expected to have increased card use and thereby card fees in the quarter. Comerica’s card fees are major contributors to its fee income, hence, it is likely to have aided fee income growth during first-quarter 2023. The Zacks Consensus Estimate for card fees is pegged at $68 million, indicating no change from the prior-quarter’s reported number.
The consensus estimate of $23.66 million for commercial lending fees suggests a 15.5% decline from the prior-quarter’s reported figure.
Management expects average deposit balance to have declined to $69 billion indicating that the customers have been utilizing balances to fund business activities during the quarter. This is likely to have affected the revenues from service charges on deposit accounts. The Zacks Consensus Estimate of $45.99 million for service charges on deposit accounts indicates a 2.1% fall from the prior-quarter’s reported number.
The consensus estimate of $266 million for overall fee income suggests a 4.3% decline from the last reported figure.
Expenses: The company has been investing in its technology platform owing to its business initiatives. It is expected to have incurred higher expenses due to rising salaries on account of inflation as well as higher revenue-related costs. Such rising costs are estimated to have weighed on its expense base to some extent in the quarter under review and hindered bottom-line growth.
Asset Quality: With decent loan growth, expectations of a worsening macroeconomic outlook and growing recession fears, CMA is expected to have set aside more money to cover expected loan losses in the first quarter. In fourth-quarter 2022, the company increased allowance for credit losses sequentially by $15 million to $624 million. The increasing momentum is expected to have continued in the first quarter as well.
What Our Model Predicts
Our proven model does not predict an earnings beat for Comerica this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: Comerica has an Earnings ESP of -1.25%.
Zacks Rank: Comerica currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.
Other Stocks Worth a Look
Here we present a few finance stocks, which you may want to consider, as these have the right combination of elements to post earnings beat in their upcoming releases, per our model.
The Bank of New York Mellon (BK - Free Report) is scheduled to release first-quarter 2023 earnings on Apr 18. BK carries a Zacks Rank #3 at present and has an Earnings ESP of +2.29%.
Commerce Bancshares (CBSH - Free Report) is slated to report first-quarter 2022 results on Apr 18. CBSH carries a Zacks Rank #3 at present and has an Earnings ESP of +2.46%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.