What Other Than Organic Growth Braces Comerica (CMA) Stock?

Comerica Incorporated’s (NYSE:CMA) robust organic growth and strong balance sheet positions the stock well to move higher. Also, a favorable industry backdrop with rising interest rates and easing regulations should lend additional support.

Comerica’s loan portfolio has been rising consistently over the last few years. Further, with the approval of the Financial Choice Act, Comerica’s lending activities are expected to improve. Management expects average loan growth of 1–2% in 2017, backed by an improving economy and rising loan demand.

Also, the company’s non-interest income growth has been impressive over the last few quarters. The uptrend was witnessed in first-quarter 2017 as well. On the back of its GEAR Up initiatives and modest growth in treasury management and card fees, along with wealth management products, the company expects its fee income to increase 4–6% in the current year.

Comerica’s active involvement in capital deployment activities is encouraging. Its 2016 capital plan (ending second-quarter 2017) includes share buybacks of up to $440 million. The company raised the common stock dividend by 13% in Apr 2017.

Comerica successfully cleared the Fed stress test for 2017, which reflects its strong capital position. Also, its debt/equity ratio compares favorably with the broader industry. These factors indicate that the dividend payments are sustainable.

Nevertheless, the company’s exposure to the challenging economic environment of California and Michigan remains a headwind.

Given Comerica’s strong fundamentals, its shares have gained 5.9% over the last six months, outperforming the Zacks categorized Banks - Major Regional industry’s rally of 2.4%.

Moreover, the Zacks Consensus Estimate for Comerica's current-year earnings has moved slightly upward, in the last 30 days. As a result, the stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other Stocks to Consider

M&T Bank Corporation’s (NYSE:MTB) witnessed a 1.1% upward revision in the Zacks Consensus Estimate for the current year, over the last 60 days. Also, its shares have gained 39.5% over the last one year. It currently carries a Zacks Rank #2.

People's Utah Bancorp’s (NASDAQ:PUB) current-year earnings estimates were revised slightly upward, over the last 60 days. Over the last one year, its shares have surged 64.1%. It carries a Zacks Rank #2.

Central Pacific Financial Corp.’s (NYSE:CPF) has seen the Zacks Consensus Estimate for its current-year earnings increasing 1.9%, over the last 60 days. Its shares have rallied 36.9% over the last one year. It currently has a Zacks Rank #2.

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