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.
STI or CMA: Which Bank is a Better Pick Post Q2 Earnings?
Read MoreHide Full Article
In the Q2 earnings season, the Finance sector turned out to be one of the best performers. Particularly, benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Moreover, lower commercial tax rate are likely to further boost banks’ profitability.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made companies optimistic of their future earnings performance and raised investors’ sentiments as well. So, we thought of picking a stock from the sector that reflects strong fundamentals and has solid long-term growth opportunities.
Therefore, we are focusing on two major banks, SunTrust Banks, Inc. (STI - Free Report) and Comerica (CMA - Free Report) .
The Zacks Industry Rank is #45 (top 18% of the 250 plus Zacks industries) for the industry, to which these two companies belong to. Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
SunTrust Banks, with a market cap of $33.4 billion, offers a wide range of financial services for consumers, businesses, corporations and institutions in the United States. On the other hand, Comerica provides various financial products and services in Texas, California, Michigan, Arizona, Florida, Canada and Mexico, and has a market cap of $16.6 billion.
SunTrust Banks sports a Zacks Rank #1 (Strong Buy) with a Value Score of B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Though both banks have similar business trends, deeper research into the financials will help decide which investment option is better.
Price Performance
Both banks have outperformed the industry (up 0.9%) year to date and gained decently. While shares of Comerica have rallied 13.7%, SunTrust Banks has gained 13.9%. So, SunTrust Banks performed better than Comerica.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12-month period is 10.94% for SunTrust Banks and 13.07% for Comerica as compared with the industry’s level of 11.6%. Therefore, Comerica reinvests its earnings more efficiently.
Earnings Estimate Revisions & Growth Projections
The Zacks Consensus Estimate for 2018 earnings of SunTrust Banks moved up 5.6% over the last 30 days. On the other hand, the same for Comerica inched up nearly 1.3% for this year, during the same time frame.
Moreover, current-year earnings for SunTrust Banks are projected to jump 38.9% year over year. For Comerica, the Zacks Consensus Estimate is pegged at $7.07 for 2018, reflecting a year-over-year surge of 49.2%.
Sales for SunTrust Banks for the current year are projected to be up 3.3% year over year to $9.3 billion. For Comerica, the Zacks Consensus Estimate is pegged at $3.4 billion for 2018, reflecting year-over-year growth of 6%.
Therefore, Comerica has an edge here as well.
Dividend Yield
Both companies have been deploying capital in terms of dividend payments to enhance shareholder value. Comerica has a current dividend yield of 1.38%, while SunTrust Banks has a dividend yield of 2.18%.
Although both the stocks’ dividend yield is lower than the industry’s average of 2.2%, shareholders of SunTrust Banks gain more.
Leverage Ratio
Both SunTrust Banks and Comerica have lower debt-to-equity ratios compared with the industry average of 0.92. However, SunTrust Banks, with a ratio of 0.54, has an edge over Comerica with a ratio of 0.69.
Conclusion
Our comparative analysis shows that Comerica is better positioned than SunTrust Banks when considering ROE, along with earnings and sales growth expectations. SunTrust Banks wins on price performance, Value Score, dividend yield and leverage ratio.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
Image: Bigstock
STI or CMA: Which Bank is a Better Pick Post Q2 Earnings?
In the Q2 earnings season, the Finance sector turned out to be one of the best performers. Particularly, benefits from a stabilizing economy and improving interest-rate scenario have well positioned the banking industry. Moreover, lower commercial tax rate are likely to further boost banks’ profitability.
In addition, relieving banks from some of the stringent requirements of the Dodd-Frank Act has made companies optimistic of their future earnings performance and raised investors’ sentiments as well. So, we thought of picking a stock from the sector that reflects strong fundamentals and has solid long-term growth opportunities.
Therefore, we are focusing on two major banks, SunTrust Banks, Inc. (STI - Free Report) and Comerica (CMA - Free Report) .
The Zacks Industry Rank is #45 (top 18% of the 250 plus Zacks industries) for the industry, to which these two companies belong to. Our back-testing shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than two to one.
SunTrust Banks, with a market cap of $33.4 billion, offers a wide range of financial services for consumers, businesses, corporations and institutions in the United States. On the other hand, Comerica provides various financial products and services in Texas, California, Michigan, Arizona, Florida, Canada and Mexico, and has a market cap of $16.6 billion.
SunTrust Banks sports a Zacks Rank #1 (Strong Buy) with a Value Score of B. Our research shows that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy), offer the best upside potential.
Comerica has a Zacks Rank #1 with a Value Score of C. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though both banks have similar business trends, deeper research into the financials will help decide which investment option is better.
Price Performance
Both banks have outperformed the industry (up 0.9%) year to date and gained decently. While shares of Comerica have rallied 13.7%, SunTrust Banks has gained 13.9%. So, SunTrust Banks performed better than Comerica.
Return on Equity (ROE)
ROE is a measure of a company’s efficiency in utilizing shareholders’ funds. ROE for the trailing 12-month period is 10.94% for SunTrust Banks and 13.07% for Comerica as compared with the industry’s level of 11.6%. Therefore, Comerica reinvests its earnings more efficiently.
Earnings Estimate Revisions & Growth Projections
The Zacks Consensus Estimate for 2018 earnings of SunTrust Banks moved up 5.6% over the last 30 days. On the other hand, the same for Comerica inched up nearly 1.3% for this year, during the same time frame.
Moreover, current-year earnings for SunTrust Banks are projected to jump 38.9% year over year. For Comerica, the Zacks Consensus Estimate is pegged at $7.07 for 2018, reflecting a year-over-year surge of 49.2%.
Hence, Comerica reflects better earnings growth prospects.
Sales Growth
Sales for SunTrust Banks for the current year are projected to be up 3.3% year over year to $9.3 billion. For Comerica, the Zacks Consensus Estimate is pegged at $3.4 billion for 2018, reflecting year-over-year growth of 6%.
Therefore, Comerica has an edge here as well.
Dividend Yield
Both companies have been deploying capital in terms of dividend payments to enhance shareholder value. Comerica has a current dividend yield of 1.38%, while SunTrust Banks has a dividend yield of 2.18%.
Although both the stocks’ dividend yield is lower than the industry’s average of 2.2%, shareholders of SunTrust Banks gain more.
Leverage Ratio
Both SunTrust Banks and Comerica have lower debt-to-equity ratios compared with the industry average of 0.92. However, SunTrust Banks, with a ratio of 0.54, has an edge over Comerica with a ratio of 0.69.
Conclusion
Our comparative analysis shows that Comerica is better positioned than SunTrust Banks when considering ROE, along with earnings and sales growth expectations. SunTrust Banks wins on price performance, Value Score, dividend yield and leverage ratio.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
See This Ticker Free >>