Should You Add Comerica Stock to Your Portfolio This Month?

NYSE: CMA | Comerica Incorporated News, Ratings, and Charts

CMA – Shares of Comerica (CMA) have been slumping so far this year, despite multiple benchmark interest rate hikes. As the commercial bank’s spreads increase due to the monetary tightening policies, is CMA an ideal investment now? Let’s find out.

With $89.20 million in total assets (as of March 31, 2022), Comerica Incorporated (CMA) offers financial products and services. It operates through four segments: Commercial Bank; Retail Bank; Wealth Management; and Finance. Since March 2022, CMA has been focused on the structural transformation of its business to improve customer service and streamline its small business focus. CMA plans to consolidate 22 of its existing 432 U.S. locations across three of its retail markets by September this year.

Rising interest rates bode well for commercial banks, as they charge higher interest on loans to customers. However, given consumer spending has been decelerating over the past month amid inflationary pressures, as retail sales declined marginally in May. This, coupled with rising borrowing costs, could discourage lending in the upcoming months, adversely impacting CMA’s loan and interest income. Shares of CMA have declined 17.1% year-to-date.

Here’s what could shape CMA’s performance in the near term:

Bleak Financials

CMA’s interest and fees on loan income declined marginally year-over-year to $383 million in the fiscal first quarter ended March 31, 2022. Total noninterest income fell 9.6% from the same period last year to $244 million. Net income came in at $189 million, reflecting a 46% decline from the prior-year quarter. In addition, the comprehensive loss amounted to $772 million, compared to the $181 income reported in the same period last year. EPS declined 43.6% from the prior-year quarter to $1.37.

Moreover, CMA’s net operating cash outflow stood at $710 million, compared to the $159 million inflow in the prior-year quarter. Cash and cash equivalents came in at $13.55 billion as of March 31, 2022, down 8.9% from March 31, 2021. In addition, loan yields declined four basis points in the fiscal first quarter, while average deposits decreased by $5.4 billion.

Poor Growth Story

CMA’s revenues declined at a 2.4% CAGR over the past three years, while EBITDA fell at a rate of 9.1% per annum over this period. Trailing-12-month EBIT fell 2% year-over-year. The company’s net income and EPS declined 8% and 1.9% per year over the past three years. Furthermore, CMA’s total assets declined at a 4% CAGR over the past three years and a 3.8% rate over the past five years.

Over the trailing 12 months, the company’s total assets fell 15.7% year-over-year. Levered free cash flow declined at 3.6% per annum over the past three years. Over the past year, levered free cash flow fell 14.4% year-over-year.

Stretched Valuation

In terms of forward non-GAAP P/E, CMA is currently trading at 10.16x, 3.9% higher than the industry average of 9.78. Its trailing-12-month PEG multiple of 0.67 is 114.8% higher than the industry average of 0.31.

In addition, CMA is currently trading 3.03 times its forward sales, 7.6% higher than the industry average of 2.82. Also, its forward Price/Book ratio of 1.39 is 29.7% higher than the industry average of 1.07.

POWR Ratings Reflect Bleak Prospects

CMA has an overall D rating, which equates to Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 distinct factors, with each factor weighted to an optimal degree.

CMA has a grade of D for Quality and Growth. The company’s trailing-12-month ROA of 1.13% is 9.9% lower than the industry average of 1.25%, justifying the Quality grade. In addition, CMA’s revenues and net income have declined at rates of 2.4% and 8% per annum over the past three years, in sync with the Growth grade.

Of the 11 stocks in the F-rated Money Center Banks industry, CMA is ranked last.

Beyond what I’ve stated above, view CMA ratings for Sentiment, Stability, Momentum, and Value here.

Bottom Line

The Fed hiked the benchmark interest rates by 75 basis points yesterday, the largest hike in nearly three decades. However, analysts expect CMA’s EPS to decline 24.5% year-over-year in the fiscal second quarter (ending June) and 10% year-over-year in fiscal 2022. As the Fed is slated to maintain its aggressive stance amid persistent macroeconomic issues, CMA is best avoided now.

Want More Great Investing Ideas?

3 Stocks to DOUBLE This Year


CMA shares were trading at $73.81 per share on Thursday afternoon, down $2.53 (-3.31%). Year-to-date, CMA has declined -13.72%, versus a -22.53% rise in the benchmark S&P 500 index during the same period.


About the Author: Aditi Ganguly


Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities. More...


More Resources for the Stocks in this Article

TickerPOWR RatingIndustry RankRank in Industry
CMAGet RatingGet RatingGet Rating

Most Popular Stories on StockNews.com


Investors: Are You Ready for November?

The S&P 500 (SPY) tumbled to end October. Is that a harbinger of more downside to come? Or will the bull market return with gusto? Investment pro Steve Reitmeister shares his time market views including a preview of his favorite stocks. Get the full story below...

3 Cybersecurity Stocks Defending Against Digital Threats

The demand for cybersecurity solutions is rising as digital threats and sophisticated cyberattacks continue to escalate. Therefore, it might be wise to keep track of cybersecurity stocks, CrowdStrike (CRWD), Palo Alto Networks (PANW), and Fortinet (FTNT), as they offer innovative solutions presenting further growth opportunities. Continue reading...

3 Oil Stocks With High Upside as Global Demand Rebounds

The outlook for oil demand growth appears promising despite economic uncertainties and worldwide supply deficit. Amid this, investing in quality oil stocks Enterprise Products Partners (EPD), Marathon Oil (MRO), and Plains All American Pipeline (PAA) could be ideal as global demand rebounds. Read more...

3 Tech Stocks Under $10 That Could Deliver Big Gains

The technology industry is booming, driven by breakthroughs and significant government investments. Thus, incorporating affordable tech stocks, Sprinklr (CXM), Sabre Corporation (SABR), and Cricut (CRCT) into your portfolio provides an accessible entry point to capitalize on the industry’s growth. Read more…

2 Concerns for Investors in October

The S&P 500 (SPY) may be touching all time highs...but recent action points to concerns on 2 fronts: inflation and earnings. Investment veteran Steve Reitmeister shares his views on these 2 timely topics along with a preview of his top stocks to buy now.

Read More Stories

More Comerica Incorporated (CMA) News View All

Event/Date Symbol News Detail Start Price End Price Change POWR Rating
Loading, please wait...
View All CMA News