As of July 18, 2023, Comerica Inc (CMA, Financial) has seen a significant price change of 4.06%, with its stock currently priced at $50.01. The financial metrics reveal a market cap of $6.6 billion and sales of $3.8 billion. The GF Value, a unique indicator of the stock's intrinsic worth, stands at $94.94, suggesting that Comerica (CMA) is significantly undervalued.
Comerica is a Dallas-based financial services company with a primary focus on relationship-based commercial banking. Its primary geographies span Texas, California, and Michigan, with operations also in Arizona, Florida, and several other states, as well as Canada.
GF Value: A Closer Look
The GF Value of Comerica (CMA, Financial) is calculated using historical trading multiples, an adjustment factor from GuruFocus based on past performance and growth, and estimates of future business performance. The GF Value Line represents the fair value at which the stock should ideally be traded. Given its current price of $50.01 per share, Comerica's stock appears to be significantly undervalued.
Because Comerica is significantly undervalued, the long-term return of its stock is likely to be much higher than its business growth.
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Financial Strength: A Critical Factor
Investing in companies with robust financial strength can mitigate the risk of permanent loss. The cash-to-debt ratio and interest coverage offer valuable insights into a company's financial strength. Comerica's cash-to-debt ratio of 0.59 is worse than 68.73% of companies in the Banks industry, indicating poor financial strength.
Profitability: The Key to Reduced Risk
Investing in profitable companies carries less risk, especially those demonstrating consistent profitability over the long term. Comerica has been profitable for 10 years over the past decade, with revenues of $3.8 billion and an EPS of $9.49 in the last 12 months. However, its operating margin of 0% is worse than 0% of companies in the Banks industry.
Growth: The Value Creator
Growth is a crucial factor in a company's valuation. Comerica’s 3-year average revenue growth rate is better than 50.68% of companies in the Banks industry. However, its 3-year average EBITDA growth rate is 0%, ranking worse than 0% of companies in the Banks industry.
ROIC vs WACC: A Profitability Assessment
Comparing a company’s return on invested capital (ROIC) to its weighted cost of capital (WACC) is another way to evaluate its profitability. Over the past 12 months, Comerica’s ROIC was 0, while its WACC came in at 5.59.
Conclusion: A Closer Look at Comerica (CMA, Financial)
In conclusion, Comerica (CMA) appears to be significantly undervalued. Despite its poor financial condition, its profitability is fair. However, its growth ranks worse than 0% of companies in the Banks industry. To learn more about Comerica stock, you can check out its 30-Year Financials here.
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