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Comerica (CMA) Q4 Earnings: What's in Store for the Stock?
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Comerica Incorporated (CMA - Free Report) is scheduled to report fourth-quarter 2016 results on Jan 17.
Comerica’s third-quarter 2016 earnings beat the Zacks Consensus Estimate and improved year over year as well. Results were primarily aided by a substantial fall in provisions and higher revenues. However, on the downside, the quarter experienced higher expenses.
Regarding the stock’s performance, Comerica gained more than 80% over the past one year, significantly outpacing the Zacks categorized Banks – Major Regional industry’s 31.0% growth.
Additionally, Comerica has delivered positive earnings surprises in three of the trailing four quarters, with an average earnings beat of 3.4% as depicted in the chart below:
Will the upcoming earnings release push the stock higher? However, our proven model does not conclusively show that Comerica is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below. We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Zacks ESP:The Earnings ESP for Comerica is -2.08%. This is because the Most Accurate estimate of 94 cents is below the Zacks Consensus Estimate of 96 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Comerica’s Zacks Rank #1 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
Factors to Influence Q4 Results
Fee Income Strength: Non-interest income might get a lift owing to Comerica’s several revenues initiatives, including enhancing product offerings. Further, the to-be-reported quarter might exhibit higher card fees and fiduciary income as the company remains focused on cross-selling opportunities.
Muted Loan Growth: According to recent data from the Federal Reserve, overall loan growth is estimated in the 0.5%–0.7% range for the quarter to be reported, affected by election and monetary policy uncertainties. While overall loan growth is anticipated to be sluggish for the quarter, consumer lending is likely to be comparatively stronger, driven by credit card and automobile loan growth. As expanding loans was one of the major ways to offset margin pressure for major banks, including Comerica, in the last few quarters, the fourth-quarter results might reflect considerable revenue pressure.
Pressure on Net Interest Margin to Ease Slightly: Rise in the 10-year Treasury yield, since Nov 8, 2016, is expected to alleviate pressure on net interest margin (NIM) to some extent. Though Comerica increased its prime lending rate, subsequent to the Fed rate hike, the favorable impact on NIM is not likely to happen in the quarter.
Cost Saving Initiatives May Ease Expense Burden: Expenses might trend upward in the upcoming release due to restructuring costs and the increase in FDIC surcharge that went effective in third-quarter 2016. However, cost pressure should be offset to some extent given the company’s GEAR Up expense savings initiatives.
Energy Portfolio Exposures: The credit performance of Comerica’s energy portfolio, representing around 5% of total loans, improved during third-quarter 2016. Management remains cautious and believes that the company is adequately reserved with reserve allocation of over 8% of energy loans as of Sep 30, 2016. We believe, given the rebound in oil prices that hit rock bottom in Feb 2016, the allowances tied with energy portfolio should not be significant. Though management considers exposures to be manageable, risk grade migration within the energy portfolio may lead to higher provisions.
Activities of Comerica during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 96 cents over the last seven days. Notably, the estimated figure represents a year-over-year growth of 34.5%.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.
The earnings ESP for Citigroup Inc. (C - Free Report) is +1.79% and it carries a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Jan 18.
The PNC Financial Services Group, Inc. (PNC - Free Report) has an earnings ESP of +1.61% and a Zacks Rank #2. It is slated to report fourth-quarter results on Jan 13.
Zacks’ Best Private Investment Ideas
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Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>..
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Comerica (CMA) Q4 Earnings: What's in Store for the Stock?
Comerica Incorporated (CMA - Free Report) is scheduled to report fourth-quarter 2016 results on Jan 17.
Comerica’s third-quarter 2016 earnings beat the Zacks Consensus Estimate and improved year over year as well. Results were primarily aided by a substantial fall in provisions and higher revenues. However, on the downside, the quarter experienced higher expenses.
Regarding the stock’s performance, Comerica gained more than 80% over the past one year, significantly outpacing the Zacks categorized Banks – Major Regional industry’s 31.0% growth.
Additionally, Comerica has delivered positive earnings surprises in three of the trailing four quarters, with an average earnings beat of 3.4% as depicted in the chart below:
Comerica Incorporated Price and EPS Surprise
Comerica Incorporated Price and EPS Surprise | Comerica Incorporated Quote
Will the upcoming earnings release push the stock higher? However, our proven model does not conclusively show that Comerica is likely to beat the Zacks Consensus Estimate in the fourth quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or at least 3 (Hold) for this to happen. Unfortunately, this is not the case here as elaborated below. We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Zacks ESP:The Earnings ESP for Comerica is -2.08%. This is because the Most Accurate estimate of 94 cents is below the Zacks Consensus Estimate of 96 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Comerica’s Zacks Rank #1 increases the predictive power of ESP. However, we also need to have a positive ESP to be confident of an earnings beat.
Factors to Influence Q4 Results
Fee Income Strength: Non-interest income might get a lift owing to Comerica’s several revenues initiatives, including enhancing product offerings. Further, the to-be-reported quarter might exhibit higher card fees and fiduciary income as the company remains focused on cross-selling opportunities.
Muted Loan Growth: According to recent data from the Federal Reserve, overall loan growth is estimated in the 0.5%–0.7% range for the quarter to be reported, affected by election and monetary policy uncertainties. While overall loan growth is anticipated to be sluggish for the quarter, consumer lending is likely to be comparatively stronger, driven by credit card and automobile loan growth. As expanding loans was one of the major ways to offset margin pressure for major banks, including Comerica, in the last few quarters, the fourth-quarter results might reflect considerable revenue pressure.
Pressure on Net Interest Margin to Ease Slightly: Rise in the 10-year Treasury yield, since Nov 8, 2016, is expected to alleviate pressure on net interest margin (NIM) to some extent. Though Comerica increased its prime lending rate, subsequent to the Fed rate hike, the favorable impact on NIM is not likely to happen in the quarter.
Cost Saving Initiatives May Ease Expense Burden: Expenses might trend upward in the upcoming release due to restructuring costs and the increase in FDIC surcharge that went effective in third-quarter 2016. However, cost pressure should be offset to some extent given the company’s GEAR Up expense savings initiatives.
Energy Portfolio Exposures: The credit performance of Comerica’s energy portfolio, representing around 5% of total loans, improved during third-quarter 2016. Management remains cautious and believes that the company is adequately reserved with reserve allocation of over 8% of energy loans as of Sep 30, 2016. We believe, given the rebound in oil prices that hit rock bottom in Feb 2016, the allowances tied with energy portfolio should not be significant. Though management considers exposures to be manageable, risk grade migration within the energy portfolio may lead to higher provisions.
Activities of Comerica during the quarter were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the quarter remained unchanged at 96 cents over the last seven days. Notably, the estimated figure represents a year-over-year growth of 34.5%.
Stocks That Warrant a Look
Here are some stocks you may want to consider, as according to our model they have the right combination of elements to post an earnings beat this quarter.
First Horizon National Corporation (FHN - Free Report) has an earnings ESP of +4.00% and a Zacks Rank #1. It is scheduled to report fourth-quarter 2016 results on Jan 13. You can see the complete list of today’s Zacks #1 Rank stocks here.
The earnings ESP for Citigroup Inc. (C - Free Report) is +1.79% and it carries a Zacks Rank #2. The company is scheduled to release fourth-quarter results on Jan 18.
The PNC Financial Services Group, Inc. (PNC - Free Report) has an earnings ESP of +1.61% and a Zacks Rank #2. It is slated to report fourth-quarter results on Jan 13.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>..