Comerica (USA Stocks: CMA), a prominent player in the Banks-Regional industry, has been showing strong
financial performance with a total revenue of
$3.5B and a robust earnings per share (EPS) of $9.52X. Despite the significant operating expenses of $38M, the company managed to generate a free cash flow of $556M, indicating its ability to sustain profitability. The company's enterprise value stands at
$14.6B, reflecting its overall market worth. Moreover, Comerica's strong balance sheet is evident from its net borrowings of
$3.7B and short-term investments of $19.2B. The company's debt to equity ratio is 8.51%, which is manageable and indicates a balanced capital structure. However, the company has a negative net debt of $47M, which could be a point of concern for investors. The company's quarterly earnings growth of 0.745 and return on asset of 1.43% further underscore its strong
financial health. Based on these factors, Comerica appears to be in a strong position, but investors should closely monitor its financials for any signs of a market adjustment. While many baby boomers remain indifferent towards the banking sector, it is worthwhile to examine Comerica. The question arises: why do we maintain confidence in anticipation of a full recovery? Is the company's current valuation justified for 2023? In this article, I will share my perspective on valuation to provide Comerica investors with a better outlook on whether to take a position in the stock.
We determine the current worth of Comerica using both absolute as well as relative valuation methodologies to arrive at its intrinsic value. In general, an absolute valuation paradigm, as applied to this company, attempts to find the value of Comerica based exclusively on its
fundamental and basic
technical indicators. By analyzing Comerica's
financials, quarterly and monthly indicators, and related drivers such as
dividends, operating cash flow, and various types of growth rates, we attempt to find the most accurate representation of
Comerica's intrinsic value. In some cases, mostly for established, large-cap companies, we also incorporate more traditional valuation methods such as dividend discount, discounted cash flow, or asset-based models. As compared to an absolute model, our relative valuation model uses a comparative analysis of Comerica. We calculate exposure to Comerica's
market risk, different
technical and
fundamental indicators, relevant financial multiples and ratios, and then
comparing them to Comerica's related companies.
Comerica Investment Alerts
Comerica investment alerts and warnings help investors to get more proficient at understanding not only critical technical and fundamental signals but also the significant portfolio-centered indicators. These indicators include beta, alpha, and other risk-related measures that will help you in monitoring Comerica performance across your portfolios.Please check all
investment alerts for Comerica
Comerica Valuation Ratios as Compared to Competition
Our valuation model uses many indicators to compare Comerica value to that of its competitors to determine the firm's financial worth. You can analyze the relationship between different fundamental ratios across Comerica competition to find
correlations between indicators driving the intrinsic value of Comerica.
Comerica Gross Profit
Comerica Gross Profit growth is one of the most critical measures in evaluating the company. The Gross Profit growth rate is calculated simply by comparing Comerica previous period's values with its current period's values. Each time period you're measuring should be of equal lengths the increase or decrease, in a company's Gross Profit between two periods. Here we show Comerica Gross Profit growth over the last 10 years. Please check Comerica's
gross profit and other
fundamental indicators for more details.
Breaking it down
The firm reported the last year's revenue of 3.53
B. Total Income to common stockholders was 1.15
B with profit before taxes, overhead, and interest of 3.47
B.
| 2020 | 2021 | 2022 | 2023 (projected) |
Net Income | 497 M | 1.17 B | 1.15 B | 1.06 B | Gross Profit | 2.38 B | 3.35 B | 3.47 B | 3.49 B |
Margins Breakdown
Comerica profit margins show the degree to which it makes money. Margin indicators are used not only by investors but also by creditors or Comerica itself as indicators of financial health and management effectiveness. Please look more closely at the different varieties of Comerica profit margins.
| EBITDA Margin | 0.47 |
| Gross Margin | 0.89 |
| Profit Margin | 0.32 |
Comerica Average Assets is increasing over the last 8 years. Also, Comerica Earnings Before Interest Taxes and Depreciation Amortization USD is increasing over the last 8 years. Comerica (USA Stocks: CMA), a key player in the Banks-Regional industry, has been demonstrating a strong
financial performance with an Earnings Per Share (EPS) of 9.52X and a net income applicable to common shares of $1.1 billion. The company's operating income stands at a robust $1.7 billion, further underlining its financial strength.
Comerica's Price to Earnings To Growth (PEG) ratio is at a modest 0.32X, suggesting that the stock may be undervalued given its earnings growth. The company's
financial health is also reflected in its balance sheet, with total assets amounting to a whopping
$85.41 billion. Its long-term investments stand at a substantial
$19.2 billion, indicating a strong investment strategy. Comerica's debt to equity ratio is relatively low at 8.51%, suggesting a balanced capital structure. However, the company's shares are currently trading at a Price to Book ratio of 1.85X, which is slightly higher than the industry average. This, coupled with a Wall Street target price of $53.46, which is lower than its 52-week high of $82.62, may indicate a potential market adjustment. In conclusion, while Comerica's financials appear strong, investors should tread carefully due to potential overvaluation and the possibility of a market adjustment. .
Time to exit of Comerica?
Comerica Incorporated's stock (CMA) currently exhibits a standard deviation of 4.6, suggesting a high level of volatility. This indicates that the stock's prices are dispersed over a broad range of values, thus presenting a higher risk than stocks with lower standard deviations. Given this increased level of risk, investors may want to contemplate whether it's time to liquidate their positions in Comerica. However, it's essential to evaluate this in conjunction with other market indicators and personal investment objectives before making a decision. Comerica demonstrates above-average downside volatility for the selected time horizon. We recommend investors to scrutinize Comerica further and ensure that all
market timing and asset allocation strategies align with the projection of Comerica's future alpha. Understanding different
market volatility trends often assists investors in timing the market. Proper utilization of volatility indicators allows traders to gauge Comerica's stock risk against market volatility during both bullish and bearish trends.
The heightened level of volatility that accompanies bear markets can directly affect
Comerica's stock price, adding stress to investors as they witness their shares' value decline. This typically compels investors to rebalance their portfolios by purchasing different stocks as prices drop. Despite the recent 4 percent slip in
Comerica's stock price, the investment outlook remains positive. The EPS estimate for next year stands at a robust
$6.79, indicating strong potential for growth. The majority of analysts maintain a 'Buy' consensus, with 12 strong buys and only 1 strong sell. The possible upside price of
$60.46 further supports this optimistic view. However, investors should also consider the possible downside price of $51.2 and the lowest estimated target price of $45. Overall, Comerica's stock presents a promising investment opportunity, but as always, potential investors should carefully consider all available data before making a decision. .
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Aina Ster is a Member of Macroaxis Editorial Board. Aina delivers weekly perspective on ongoing market and economic trends, analysis and tips from predictive analysis to forecasting across various financial instruments.
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