Comerica Inc Stock Valuation – February 2016 $CMA

Benjamin Graham taught that Intelligent Investors must do a thorough fundamental analysis of investment opportunities to determine their intrinsic value and inherent risk.  This is best done by utilizing a systematic approach to analysis that will provide investors with a sense of how a specific company compares to another company or by reviewing the 10 Companies Benjamin Graham Would Invest In Today – February 2016.  By using the ModernGraham method one can review a company’s historical accomplishments and determine an intrinsic value that can be compared across industries.  What follows is a stock analysis showing a specific look at how Comerica Inc (CMA) fares in the ModernGraham valuation model.

Company Profile (obtained from Google Finance): Comerica Incorporated is a financial services company. The Company’s principal activity is lending to and accepting deposits from businesses and individuals. It operates in three business segments: the Business Bank, the Retail Bank and Wealth Management. In addition, it also operates in the Finance segment. The Business Bank segment offers commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services and loan syndication services. The Retail Bank segment offers deposit accounts, installment loans, credit cards, student loans, home equity lines of credit and residential mortgage loans. The Wealth Management segment offers fiduciary services, private banking, retirement services, investment management and advisory services, investment banking and brokerage services. The Finance segment includes its securities portfolio, and asset and liability management activities.


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Premium members can view a full ModernGraham valuation of the company and have access to download a PDF version of the valuation for easy reference. Here is a free sample valuation pdf, and here is a post detailing what can be found within each individual company’s valuation.


Downloadable PDF version of this valuation:

ModernGraham Valuation of CMA

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $6,174,473,573 Pass
2. Earnings Stability Positive EPS for 10 years prior Fail
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 80.49% Pass
5. Moderate PEmg Ratio PEmg < 20 11.34 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 0.79 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

Stage 2: Determination of Intrinsic Value

CMA value chart February 2016

EPSmg $2.90
MG Growth Estimate 12.15%
MG Value $95.18
Opinion Undervalued
MG Grade B
MG Value based on 3% Growth $42.08
MG Value based on 0% Growth $24.67
Market Implied Growth Rate 1.42%
Current Price $32.92
% of Intrinsic Value 34.59%

Comerica Incorporated is suitable for the Enterprising Investor but not the more conservative Defensive Investor. The Defensive Investor is concerned with the insufficient earnings stability over the last ten years. The Enterprising Investor has no initial concerns.  As a result, all Enterprising Investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $1.60 in 2012 to an estimated $2.90 for 2016. This level of demonstrated earnings growth does not support the market’s implied estimate of 1.42% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.  Comerica Incorporated performs fairly well in the ModernGraham grading system, scoring a B.

Stage 3: Information for Further Research

CMA charts February 2016

Graham Number $51.96
PEmg 11.34
PB Ratio 0.79
Dividend Yield 2.52%
Number of Consecutive Years of Dividend Growth 7


Useful Links:

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Google Finance MSN Money
Yahoo Finance Seeking Alpha
GuruFocus SEC Filings

Most Recent Balance Sheet Figures

Balance Sheet Information Dec2015
Long-Term Debt $3,058,000,000
Total Assets $71,895,000,000
Intangible Assets $0
Total Liabilities $64,321,000,000
Shares Outstanding (Diluted Average) 181,104,000

Earnings Per Share History

Next Fiscal Year Estimate $2.80
Dec2015 $2.92
Dec2014 $3.16
Dec2013 $2.85
Dec2012 $2.67
Dec2011 $2.09
Dec2010 $0.88
Dec2009 -$0.79
Dec2008 $1.28
Dec2007 $4.43
Dec2006 $5.49
Dec2005 $5.11
Dec2004 $4.36
Dec2003 $3.75
Dec2002 $3.40
Dec2001 $3.88
Dec2000 $4.31
Dec1999 $4.14
Dec1998 $3.72
Dec1997 $3.19
Dec1996 $2.38

Earnings Per Share – ModernGraham History

Next Fiscal Year Estimate $2.90
Dec2015 $2.88
Dec2014 $2.68
Dec2013 $2.14
Dec2012 $1.60
Dec2011 $1.24
Dec2010 $1.30
Dec2009 $2.04
Dec2008 $3.68
Dec2007 $4.79
Dec2006 $4.79
Dec2005 $4.33
Dec2004 $3.94
Dec2003 $3.78
Dec2002 $3.83
Dec2001 $3.98
Dec2000 $3.87

Recommended Reading:

Other ModernGraham posts about the company

7 Best Stocks For Value Investors This Week – 10/24/15
The 16 Best Stocks For Value Investors This Week – 8/1/15
Comerica Incorporated Analysis – July 2015 Update $CMA
27 Companies in the Spotlight This Week – 4/4/15
Comerica Inc. Quarterly Valuation – April 2015 $CMA

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The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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