Stock in the Spotlight: Comerica Incorporated (NYSE:CMA)

Comerica Incorporated (NYSE:CMA) reported earnings for the three months ended Mar2016 on April 19, 2016. The company earned $0.34 per share on revenue of $693M. Analysts had been modeling earning per share of $0.45 with $708.94M in revenue.

Comerica Incorporated (CMA) on April 19, 2016 reported first quarter 2016 net income of $60 million, compared to $116 million for the fourth quarter 2015 and $134 million for the first quarter 2015. Earnings per diluted share were 34 cents for first quarter 2016 compared to 64 cents for fourth quarter 2015 and 73 cents for first quarter 2015.

“Our first quarter results were impacted by the current oil and gas cycle, as we significantly increased our reserve for loan losses,” said Ralph W. Babb, Jr., chairman and chief executive officer. “We continue to be prudent in our reserving approach. While this approach resulted in a higher provision this quarter, our fundamental view of the energy sector has not changed significantly. Additionally, during the quarter we benefited from the December short-term rate increase, with loan yields increasing and helping to drive a $14 million increase in net interest income.”

First Quarter 2016 Compared to Fourth Quarter 2015

• Average total loans decreased $156 million to $48.4 billion, primarily reflecting decreases in general Middle Market, Energy and Mortgage Banker Finance, partially offset by an increase in Commercial Real Estate. Period-end total loans increased $293 million, to $49.4 billion.


• Average total deposits decreased $3.0 billion to $56.7 billion, reflecting seasonality, purposeful pricing discipline and strategic actions in light of new liquidity coverage ratio rules, with the largest declines in Corporate Banking, the Financial Services Division and Municipalities. Period-end total deposits decreased $3.5 billion to $56.4 billion. A majority of the decrease related to an elevated deposit level associated with the government card program at year-end.


• Net interest income increased $14 million to $447 million, primarily reflecting an increase in loan yields, mostly due to increases in short-term rates, and a larger average securities portfolio, partially offset by one fewer day in the first quarter. The net interest margin increased 23 basis points to 2.81 percent, primarily reflecting higher loan yields and a decrease in Federal Reserve Bank deposits.

Comerica Incorporated earnings per share showed a decreasing trend of -10.2% for the current fiscal year. The company’s expected EPS growth rate for next fiscal year is 320%.Analysts project EPS growth over the next 5 years at 3.52%. It has EPS annual growth over the past 5 fiscal years of 29.3% when sales declined -0.8. It reported 8.5% sales growth, and -53.8% EPS decline in the last quarter.

The stock is trading at $47.1, up 55.42% from 52-week low of $30.48. The stock trades down -10.49% from its peak of $53.45 and -7.9% below the consensus price target of $43.38. Its volume clocked up at 2.23 million shares which is lower than the average volume of 2.74 million shares. Its market capitalization currently stands at $8.23B.