This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

2 Bank Stocks to Sell and 1 to Buy From Citigroup

Comerica
Shares of Comerica (CMA) of Dallas closed at $32.02 Wednesday, returning 25% year-to-date, following a 38% decline last year.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

The shares trade for just over tangible book value, and for 12 times the consensus 2013 EPS estimate of $2.64.

Comerica on March 14 announced that the Federal Reserve had not objected to its capital plan, which provided up to $375 million in common share buybacks through the first quarter of 2013. The capital plan also included an increase of the company's quarterly dividend to 15 cents a share from 10 cents, which "will be considered by the Board at its April 24, 2012, meeting."

Based on the current 10-cent quarterly payout, Comerica's shares have a dividend yield of 1.25%.

Comerica will report its first-quarter results on April 17, with a consensus EPS estimate of 55 cents.

Levin assumed coverage of Comerica, lowering Citigroup's rating for the shares to "Sell" with a $29 price target,from a neutral rating, saying his call was "primarily valuation driven but we also believe there may be a near-term negative catalyst."

The analyst called Comerica "a well-run company with a highly talented and capable management team," adding that "Its C&I focused business model exposes it to that segment of the loan market which we believe will experience the highest growth over the next one to two years." Levin also said that the company's "conservative credit culture that served it well during the credit crisis."

But the analyst called Comerica "a bad stock at its current price," because the company "has the greatest gap in our coverage universe between what we project its equity spread (ROE minus cost of equity) will be in '12 and '13 and what the stock is pricing in at its current valuation."

Levin provided some very clear direction in his call, saying that "unless an investor is willing to make an implicit or explicit call that interest rates in the future will be meaningfully higher than what the forward curves are currently implying, we think he or she should sell CMA."

Citigroup estimates that Comercia will post first-quarter EPS of 61 cents, with full-year earnings of $2.31 a share for all of 2012, and 2013 EPS of $2.64.

Interested in more on Comerica? See TheStreet Ratings' report card for this stock.

3 of 4

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,279.74 +13.75 0.08%
S&P 500 2,010.40 -0.96 -0.05%
NASDAQ 4,579.7890 -13.6380 -0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs