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8 Post-Downgrade Bank Stock Bargains

5. Comerica
Shares of Comerica (CMA) of Dallas closed at $30.28 Friday, returning 18% year-to-date, following a 38% decline during 2011.

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Based on a 15-cent quarterly payout, the shares have a dividend yield of 1.98%.

The shares trade for 0.9 times their reported March 31 tangible common equity per share of common stock of $32.06, and for 11 times the consensus 2013 earnings estimate of $2.71. The consensus 2012 EPS estimate is $2.51.

Wunderlich Securities analyst Kevin Reynolds on June 18 reiterated his "Buy" rating for Comerica, with a $37 price target, saying that "negative psychology toward the banking sector has outweighed this strong fundamental story," and that the company "has one of the strongest balance sheets of any regional bank in the U.S., and its shares trade at a modest, but in our view unwarranted, discount to its regional bank peers."

According to Thomson Reuters Bank Insight, Comerica's first-quarter operating return on average assets improved to 0.84%, from 0.68% in the fourth quarter and 0.77% during the first quarter of 2011.

Reynolds's price target is "just 1.1 times [his] projected TBV/share, offering a total return of roughly 25%, inclusive of CMA's 2.0% dividend yield."

The analyst estimates Comerica will earn $2.60 a share this year, followed by 2013 EPS of $2.85.

After the company repurchased 1.1 common shares for $33 million during the first quarter, Reynolds said Comerica had bought back 2.9 million shares for $88 million so far during the second quarter, "at an average price of $30.50, under its existing $375 million buyback program."

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