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Comerica (CMA) Surges Nearly 56% QTD: Can the Rally Continue?
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Shares of Comerica Incorporated (CMA - Free Report) have jumped 55.8% quarter to date, significantly outperforming the industry’s rally of 27.9%. The stock has also surpassed the S&P 500’s rally of 23.6% in the same frame.
Notably, the recent price performance of this Zacks Rank #3 (Hold) stock compares favorably with the disappointing start to 2020. The company’s shares lost 59.1% in the first quarter, mainly owing to the coronavirus outbreak.
The gradual easing of lockdown-related norms along with Comerica’s several efforts to improve efficiency supported growth. Further, with expectations of a rebound in the second half of 2020, the company’s stellar performance might continue.
Let’s check out some of the key factors that are adequate to support steady price appreciation for Comerica.
Quarter To Date Performance
Revenue Growth: Given a steady improvement in net interest income, total revenues of Comerica witnessed a five-year CAGR of 7.9% (2015-2019). Furthermore, the company’s income-generation capability, given the implementation of strategic initiatives, is encouraging.
Notably, management expects non-interest income to benefit from an increase in card fees with higher transaction volume, as customers receive the government stimulus funds, partly offset by lower merchant and commercial card activities.
Gear-Up Initiatives: Comerica’s focus on improving operational efficiency led to the introduction of GEAR Up initiatives in mid-2016. Since the implementation of the initiative, the bank has consolidated 38 banking centers, reduced retirement plan expenses significantly and retrenched around 800 employees, among others.
Further, with the initiatives, the company remains on track to generate higher revenues through product enhancements, enhanced sales tools and improved customer analytics to drive opportunities.
Earnings Strength: Comerica’s earnings have witnessed a 29.4% rise in the past three-five years compared with the industry’s 12.5% growth. The momentum is anticipated to continue in the quarters ahead. The company’s long-term (three-five years) expected earnings growth rate of 1.7% promises rewards for shareholders.
Impressive Capital Deployment: Comerica is actively involved in capital-deployment activities. In January 2020, the board of directors hiked the quarterly dividend by 1.5%. Also, last November, the company announced an additional share-buyback plan, with authorization to repurchase 7 million shares.
Driven by a strong liquidity position and consistently improving earnings, the company’s capital-deployment activities look sustainable. This is expected to further enhance shareholder value.
Strong Leverage: The company’s debt/equity ratio is 1 compared with the industry’s 1.06. This reflects that it will be financially stable, even during adverse economic situations.
Franklin Resources, Inc. (BEN - Free Report) earnings estimates for the current year have been revised 1% upward over the past 60 days. Over the past six months, this Zacks #1 Ranked company’s shares have declined 8.8%.
Earnings estimates for First Republic Bank have moved 17.1% north over the past 60 days for the ongoing year. The company’s shares have rallied 2.8% over the past six months. It carries a Zacks Rank of 2 at present.
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Comerica (CMA) Surges Nearly 56% QTD: Can the Rally Continue?
Shares of Comerica Incorporated (CMA - Free Report) have jumped 55.8% quarter to date, significantly outperforming the industry’s rally of 27.9%. The stock has also surpassed the S&P 500’s rally of 23.6% in the same frame.
Notably, the recent price performance of this Zacks Rank #3 (Hold) stock compares favorably with the disappointing start to 2020. The company’s shares lost 59.1% in the first quarter, mainly owing to the coronavirus outbreak.
The gradual easing of lockdown-related norms along with Comerica’s several efforts to improve efficiency supported growth. Further, with expectations of a rebound in the second half of 2020, the company’s stellar performance might continue.
Let’s check out some of the key factors that are adequate to support steady price appreciation for Comerica.
Quarter To Date Performance
Revenue Growth: Given a steady improvement in net interest income, total revenues of Comerica witnessed a five-year CAGR of 7.9% (2015-2019). Furthermore, the company’s income-generation capability, given the implementation of strategic initiatives, is encouraging.
Notably, management expects non-interest income to benefit from an increase in card fees with higher transaction volume, as customers receive the government stimulus funds, partly offset by lower merchant and commercial card activities.
Gear-Up Initiatives: Comerica’s focus on improving operational efficiency led to the introduction of GEAR Up initiatives in mid-2016. Since the implementation of the initiative, the bank has consolidated 38 banking centers, reduced retirement plan expenses significantly and retrenched around 800 employees, among others.
Further, with the initiatives, the company remains on track to generate higher revenues through product enhancements, enhanced sales tools and improved customer analytics to drive opportunities.
Earnings Strength: Comerica’s earnings have witnessed a 29.4% rise in the past three-five years compared with the industry’s 12.5% growth. The momentum is anticipated to continue in the quarters ahead. The company’s long-term (three-five years) expected earnings growth rate of 1.7% promises rewards for shareholders.
Impressive Capital Deployment: Comerica is actively involved in capital-deployment activities. In January 2020, the board of directors hiked the quarterly dividend by 1.5%. Also, last November, the company announced an additional share-buyback plan, with authorization to repurchase 7 million shares.
Driven by a strong liquidity position and consistently improving earnings, the company’s capital-deployment activities look sustainable. This is expected to further enhance shareholder value.
Strong Leverage: The company’s debt/equity ratio is 1 compared with the industry’s 1.06. This reflects that it will be financially stable, even during adverse economic situations.
Key Picks
Bank of Hawaii Corporation’s (BOH - Free Report) 2020 earnings estimates have been revised 18.2% upward over the past 60 days. This Zacks Rank #2 (Buy) company’s shares have lost 21.2% over the past six months. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Franklin Resources, Inc. (BEN - Free Report) earnings estimates for the current year have been revised 1% upward over the past 60 days. Over the past six months, this Zacks #1 Ranked company’s shares have declined 8.8%.
Earnings estimates for First Republic Bank have moved 17.1% north over the past 60 days for the ongoing year. The company’s shares have rallied 2.8% over the past six months. It carries a Zacks Rank of 2 at present.
Breakout Biotech Stocks with Triple-Digit Profit Potential
The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
See these 7 breakthrough stocks now>>