Shares of Comerica Incorporated (CMA) achieved a new 52-week high, touching $41.12 on Jul 3, 2013. The closing price of this regional bank reflects a robust year-to-date return of 31.9%. The trading volume for the session was 1.5 million shares.
Despite the strong price appreciation, this Zacks Rank #3 (Hold) stock has plenty of upside left given its expected long-term earnings growth rate of 6.2%.
Growth Drivers
Impressive first-quarter 2013 results, a strong capital position and healthy capital deployment activities were the company’s primary growth drivers.
Comerica’s first-quarter earnings beat the Zacks Consensus Estimate by 4.5%. Results benefited from reduced expenses, growth in average loans and improved credit metrics. However, the positives were partially offset by lower revenues.
Further, over the years, Comerica’s capital deployment initiatives through dividend payment and share buybacks boosted confidence of yield seeking investors. During the first quarter, the company paid back 77% of net income to shareholders. We expect such actions to garner more trust from investors.
We believe Comerica’s continuous geographic diversification beyond its long-established but slower-growing Midwest markets to drive growth over the next cycle. Further, we expect revenue synergies from the Sterling Bancshares Inc acquisition to augment top-line growth in the near term.
Estimate Revisions
For 2013, the Zacks Consensus Estimate moved north marginally to $2.79 per share over the last 60 days. For 2014, the Zacks Consensus Estimate moved up 1.1% to $2.84 per share over the same time period.
Some better performing banks include Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and KeyCorp. (KEY), all of which carry a Zacks Rank #2 (Buy).
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