Sunday, July 22, 2018

Exceptional Rate Leverage Continues To Drive Comerica

With one of the strongest net betas (loan beta minus deposit beta) in the banking sector, Comerica (CMA) has continued to outperform, with the shares beating regional peers over the last year and on a year-to-date basis, though lagging more recently. Although Comerica isn’t posting particularly strong loan growth, that’s actually not such a bad thing right now, as loan growth isn’t really what the market is prioritizing or valuing (EPS revisions/growth are stronger drivers at the moment).

Comerica continues to look like a good name to consider for investors who want to play above-average near-term earnings growth, but aren’t as worried about valuation relative to long-term benchmarks. Rising deposit costs do remain a worry, but between regulatory relief, spread leverage, operating leverage, and perhaps some M&A options, Comerica still offers a lot of what the Street currently wants in a bank stock.

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Exceptional Rate Leverage Continues To Drive Comerica

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