Comerica Shows Stability in Fundamentals - Analyst Blog

On Jun 3, 2014, we issued an updated research report on Comerica Incorporated CMA. This Texas based major regional bank exhibits decent fundamentals amid a competitive banking environment.

Comerica's solid capital position is reflected by the Federal Reserve's approval of its 2014 capital plan. The company increased its quarterly common stock dividend by 5.3% in Apr 2014. Also, it authorized an additional share repurchase of 2 million shares. We believe these efforts will continue to boost investors' confidence.

Comerica has exhibited efficient efforts in controlling several cost overheads in the past couple of years. Further, the company targets lower non-interest expense in 2014, primarily owing to decreased legal costs and more than 50% decline in pension expenses. We remain encouraged owing to such efforts that will drive operational efficiency and improve profitability.

Comerica's first-quarter 2014 earnings per share of 73 cents outpaced the Zacks Consensus Estimate by 1.4%. Notably, with this the company delivered positive earnings surprises in all the trailing 4 quarters with an average beat of 6.0%.

Despite the positives, we remain cautious owing to several issues faced by Comerica that pose a threat to the company's financials. These include a continuous decline in net interest margin amid a low interest rate environment, a less diversified geographical footprint and the prevailing stringent regulatory landscape.

Analysts' mixed stance on the stock was reflected in the movement of the Zacks Consensus Estimate over the past 60 days. For 2014, the Zacks Consensus Estimate moved north 0.67% to $3.04 per share while it fell nearly 1% to $3.21 per share for 2015.

Comerica currently carries a Zacks Rank #3 (Hold).

Stocks That Warrant a Look

KCG Holdings, Inc. KCG, Woori Finance Holdings Co., Ltd. WF and Central Pacific Financial Corp. CPF are among the better-ranked stocks in the finance sector. All these stocks hold a Zacks Rank #1 (Strong Buy).