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Comerica Incorporated CMA is scheduled to report second-quarter 2018 results before the opening bell on Jul 17. Its revenues and earnings are expected to grow year over year.
Before we discuss why an earnings beat might also be in store, let’s take a look at how the company performed in the last reported quarter.
Comerica’s first-quarter 2018 results reflected rise in revenues. Also, a strong capital position and improving credit quality were the positives. However, higher expenses and a fall in deposits were the key headwinds.
Notably, the company boasts an impressive earnings surprise history. It surpassed earnings estimates in each of the trailing four quarters, with an average positive surprise of 5.2%.
Comerica Incorporated Price and EPS Surprise
Comerica Incorporated Price and EPS Surprise | Comerica Incorporated Quote
Now let’s take a look at what our quantitative model predicts for the to-be-reported quarter:
Our proven model shows that Comerica has the right combination of the two key ingredients —positive Earnings ESP and a Zacks Rank #3 (Hold) or better — to increase the odds of an earnings beat.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks ESP: The Earnings ESP for Comerica is +1.60%.
Zacks Rank: The company currently carries a Zacks Rank of 3.
Though estimates for the to-be-reported quarter have been revised slightly downward over the last seven days, the Zacks Consensus Estimate for earnings of $1.62 reflects growth of 43.4% year over year.
Factors to Drive the Results
Net Interest Income (NII) to Rise: Comerica’s net interest income is likely to improve in the to-be-reported quarter supported by expanding net interest margin and a pickup in loan growth, particularly in the areas of commercial and industrial, and consumer.
These benefits might partially be offset by a fall in interest earning assets. The Zacks Consensus Estimate projects a slight decline in average earnings assets balance to $66 billion on a year-over-year basis.
Higher Fee Income: Investment banking performance is expected to be flat during the quarter. Strong equity issuances globally might have been boosted by IPOs and follow-on offerings. So, equity underwriting fees are likely to show improvement. Also, increasing M&As will likely support advisory fees to some extent.
Moreover, given the continued momentum in customer activity, in terms of using credit and debit cards, the company might have recorded higher related fees.
Therefore, given expectations for rise in both NII and fee income, total revenues are likely to increase. The Zacks Consensus Estimate for sales for the second quarter is $831.9 million, reflecting an improvement of 7.2% year over year.