Long-established in the Banks industry, Comerica Inc (CMA, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a decline of 3.27%, juxtaposed with a three-month change of 10.59%. Fresh insights from the GuruFocus Score Rating 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.
Understanding 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.
- 1. Financial strength rank: 4/10
- 2. Profitability rank: 5/10
- 3. Growth rank: 3/10
- 4. GF Value rank: 4/10
- 5. Momentum rank: 2/10
Based on the above method, GuruFocus assigned Comerica Inc the GF Score of 60 out of 100, which signals poor future outperformance potential.
Comerica Inc: A Snapshot of Its Business
Comerica Inc is a financial services company headquartered in Dallas, primarily focused on relationship-based commercial banking. With a market cap of $6.18 billion and sales of $3.92 billion, its primary geographies are Texas, California, and Michigan, with locations also in Arizona and Florida and select businesses operating in several other states as well as Canada. However, the company's operating margin stands at 0, indicating potential challenges in profitability.
Financial Strength Analysis
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 0.62 indicates a struggle in handling existing debt levels. Its debt-to-equity ratio is 2.95, which is worse than 91.5% of 1330 companies in the Banks industry, suggesting over-reliance on borrowing and vulnerability to market fluctuations. Furthermore, the company's debt-to-Ebitda ratio is 4.22, above Joel Tillinghast's warning level of 4 and worse than 75.42% of 1310 companies in the Banks industry, indicating potential financial distress.
Profitability Analysis
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%), as shown by the following data: 2018: 37.11; 2019: 35.96; 2020: 17.07; 2021: 39.37; 2022: 32.57.
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. Lastly, Comerica Inc's predictability rank is just one star out of five, adding to investor uncertainty regarding revenue and earnings consistency.
Conclusion
Given Comerica Inc's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While the company has a rich history and a broad geographical presence, its financial health and growth prospects raise concerns about its ability to outperform in the future. Therefore, investors should exercise caution and conduct thorough research before making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
