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Can Q3 Earnings Propel Comerica (CMA) Stock to New Highs?

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Comerica Incorporated (CMA - Free Report) is scheduled to report third-quarter 2017 results before the opening bell on Oct 17. Its revenues and earnings are expected to grow year over year.

The company boasts a decent earnings surprise history. It surpassed earnings estimates in each of the trailing four quarters, with an average positive surprise of 12.26%.

These earnings beats along with fundamental strength helped Comerica’s shares gain 56.7% in a year’s time, outperforming the industry’s 40% rally.

Comerica Incorporated Price and EPS Surprise

Will the stock keep rallying post third-quarter earnings release? It majorly depends on whether the firm is able to maintain its earnings momentum.

Our proven model shows that Comerica has the right combination of the two key ingredients —positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat in the third quarter.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +0.23%. This is a major indicator of a likely positive earnings surprise.

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 #3 (Hold) when combined with a positive ESP makes us reasonably confident of an earnings beat.

Further, the estimates have revised 1.7% upward over the past 30 days. The Zacks Consensus Estimate for earnings of $1.21 for the third quarter reflects growth of 43.5% year over year.

Also, the Zacks Consensus estimate for revenues of $812.8 million for the third-quarter reflects year-over-year growth of 12.6%.

Factors to Drive the Results

Easing Pressure on Net Interest Margin (NIM): With the gradual change in the rate environment, margin pressure for Comerica seems to be easing. In 2016, the company reported a rise in net interest margin (NIM) after years of decline, with the uptrend continuing in the first half of 2017. The trend might continue in the upcoming quarter.  

Growth in Average Loan Balance: Comerica’s average loans are likely to increase given a moderate improvement in lending — particularly, in the areas of commercial and industrial as well as consumer loans.

Net Interest Income to Grow: Owing to an improvement in loan balances and easing pressure on net interest margin, Comerica is likely to witness growth in interest income.

Effective Cost Saving Initiatives: Expenses might trend down in the upcoming release due to the company’s GEAR Up expense savings initiatives.

Other Stocks that Warrant a Look

Here are some other stocks you may want to consider, as they have the right combination of elements to post an earnings beat this quarter.

State Street Corporation’s (STT - Free Report) Earnings ESP is +0.27% and it carries a Zacks #2 Rank (Buy). The company is expected to release third-quarter results on Oct 23. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

M&T Bank Corp.’s (MTB - Free Report) Earnings ESP is +0.33% and it carries a Zacks Rank #3. The company is expected to release third-quarter results on Oct 18.

U.S. Bancorp (USB - Free Report) is slated to report third-quarter results on Oct 18. It has an Earnings ESP of +0.26% and a Zacks Rank #3.

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