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Can Comerica (CMA) Maintain its Earnings Beat Streak in Q2?


Comerica Incorporated CMA is scheduled to report second-quarter 2017 results before the opening bell on Jul 18. Its revenues and earnings are expected to grow year over year.

The company boasts a decent earnings surprise history. It surpassed earnings estimates in each of the trailing four quarters, with an average positive surprise of 8.7%.

These earnings beats along with fundamental strength helped Comerica’s shares gain 10.2% year to date, outperforming the Zacks categorized Banks – Major Regional industry’s 6.2% rally.

Comerica Incorporated Price and EPS Surprise

Will the rally in stock price continue post second-quarter earnings release? It majorly depends on whether the firm is able to maintain its trend of beating earnings estimates.

Our proven model shows that Comerica has the right combination of two key ingredients – positive Earnings ESP and a Zacks Rank #3 (Hold) or better – to increase the odds of an earnings beat.

Zacks ESP: Earnings ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, stands at +4.67%. This is a major indicator of a likely positive earnings surprise.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Comerica’s Zacks Rank #2 (Buy) when combined with a positive ESP makes us reasonably confident of an earnings beat.

Factors to Drive Better-than-Expected Results

Easing Pressure on Net Interest Margin (NIM): The interest rate hike by the Federal Reserve in Mar 2017, followed by another in Jun 2017 might be successful in easing some margin pressure. However, the contraction in the three-month/10-year Treasury spread might offset some benefits.

Growth in Average Loan Balance: Comerica’s average loans are likely to increase given a seasonal rebound in the mortgage banker finance. Further, clearing of some uncertainties related to Trump’s policies and a slightly better lending scenario was witnessed in the second quarter.

Lower Fee income: Owing to the decline in M&As and equity issuance activities in the quarter, Comerica’s fee income might witness some pressure.

Effective Cost Saving Initiatives: Expenses might trend downward in the upcoming release due to the company’s GEAR Up expense savings initiatives.

Activities of Comerica during the quarter were inadequate to win analysts’ confidence. Over the last seven days, the Zacks Consensus Estimate for the quarter’s earnings remained stable at $1.07.

Other Stocks that Warrant a Look

Here are some other stocks you may want to consider, as they have the right combination of elements to post an earnings beat this quarter.

Citizens Financial Group, Inc. CFG is slated to report second-quarter results on Jul 21. It has an Earnings ESP of +1.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fifth Third Bancorp’s FITB Earnings ESP is +2.38% and it carries a Zacks Rank #3. The company is expected to release second-quarter results on Jul 21.

Huntington Bancshares Incorporated HBAN has an Earnings ESP of +4.35% and a Zacks Rank #3. It is scheduled to report second-quarter results on Jul 21.

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