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Expectations High for Comerica

NEW YORK (TheStreet) -- With the prospect of higher interest rates around the corner, you will have to search long and hard these days to find a bank stock that is still cheap.

To that end, I won't put up an argument that Comerica (CMA - Get Report) is undervalued. I do believe, however, that given Comerica's above-average loan growth and expense controls relative to Commerce Bancshares (CBSH) and Bank of the Ozarks (OZRK), Comerica can still outperform by accelerating its income in a relatively short period of time. The problem is that the Street already knows this.

Although Comerica's management was criticized last year for the bank's "asset-sensitive" business, which some believe made the bank too susceptible to low interest rates, the same reason is now being used for why these shares will go higher.

What bothers me is that despite these perceived drawbacks, these same analysts conveniently discount that Comerica had consistently beaten its quarterly estimates in areas like low credit costs and outperformed the likes of Wells Fargo (WFC) and Citigroup (C) in fee income growth. (Not to mention the drastic improvements seen in areas like non-performing loans.)

Friday, Comerica management will look to affirm the bank's solid direction when it reports fourth-quarter results. The Street will be looking for 74 cents in earnings-per-share on revenue of $619 million, which would represent a year-over-year revenue decline of 1.4%. Given the recurring theme of declining revenue I've seen from all of the big banks so far, this 1.4% decline would stand out as one of the best.

Given what has been a weak environment for interest rates, don't place too much confidence in the revenue metric. It's expected to be down throughout the entire sector. In the case of Comerica, with a sizable commercial loan book, investors should key on what management produces in areas like net interest margin (the metric that explains how well management has utilized capital relative to the bank's debt situation).

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