Long-established in the Banks industry, Comerica Inc (CMA, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 0.11%, juxtaposed with a three-month change of -5.1%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of Comerica Inc.
What Is the GF Score?
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 4/10
- Profitability rank: 5/10
- Growth rank: 3/10
- GF Value rank: 4/10
- Momentum rank: 4/10
Based on the above method, GuruFocus assigned Comerica Inc a GF Score of 64 out of 100, which signals poor future outperformance potential.
Understanding Comerica Inc's Business
Comerica Inc is a financial services company headquartered in Dallas, primarily focused on relationship-based commercial banking. With a market cap of $5.94 billion and sales of $3.83 billion, Comerica Inc operates in key regions such as Texas, California, and Michigan, with additional locations in Arizona, Florida, and several other states, as well as Canada. Despite not having an operating margin available for analysis, the company's income breakdown can provide insights into its revenue streams.
Financial Strength Breakdown
Comerica Inc's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.75 indicates a struggle in handling existing debt levels. Furthermore, the debt-to-equity ratio is 2.18, which is worse than 86.13% of companies in the Banks industry. This high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations. Additionally, the company's debt-to-Ebitda ratio is not applicable, which could be a red flag unless tangible assets cover the debt.
Profitability Breakdown
Comerica Inc's low Profitability rank can also raise warning signals. The company's Net Margin has declined over the past five years (-12.23%), with figures showing a decrease from 37.11% in 2018 to 32.57% in 2022. This trend indicates a potential erosion of profitability, which could impact the company's financial health and investor returns.
Growth Prospects
A lack of significant growth is another area where Comerica Inc seems to falter, as evidenced by the company's low Growth rank. Moreover, Comerica Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency. This low predictability could deter investors seeking stable and predictable growth trajectories.
Next Steps
Considering Comerica Inc's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. Investors should be cautious and consider these factors when evaluating the company's future prospects. For those seeking more robust investment opportunities, GuruFocus Premium members can find companies with strong GF Scores using the following screener link: GF Score Screen.
This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
