Watch Out: Barbarians At The Gate For Comerica (CMA)
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.
Trade-Ideas LLC identified
(
) as a "barbarian at the gate" (strong stocks crossing above resistance with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified Comerica as such a stock due to the following factors:
- CMA has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $58.8 million.
- CMA has traded 215,477 shares today.
- CMA traded in a range 204.8% of the normal price range with a price range of $1.49.
- CMA traded above its daily resistance level (quality: 85 days, meaning that the stock is crossing a resistance level set by the last 85 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).
Stocks matching the 'Barbarian at the Gate' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying positive price action. In this case, the stock crossed an important inflection point; namely, 'resistance' while at the same time the range of the stock's movement in price is more than twice its normal size. This large range foreshadows a possible continuation as the stock moves higher.
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More details on CMA:
Comerica Incorporated, through its subsidiaries, provides various financial products and services. It operates through three segments: Business Bank, Retail Bank, and Wealth Management. The stock currently has a dividend yield of 1.8%. CMA has a PE ratio of 14.5. Currently there are 6 analysts that rate Comerica a buy, 2 analysts rate it a sell, and 17 rate it a hold.
The average volume for Comerica has been 2.2 million shares per day over the past 30 days. Comerica has a market cap of $8.1 billion and is part of the financial sector and banking industry. The stock has a beta of 1.33 and a short float of 4.6% with 6.78 days to cover. Shares are down 1.8% year-to-date as of the close of trading on Thursday.
Analysis:
rates Comerica as a
. The company's strengths can be seen in multiple areas, such as its increase in net income, expanding profit margins, growth in earnings per share and notable return on equity. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
Highlights from the ratings report include:
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Commercial Banks industry average. The net income increased by 27.4% when compared to the same quarter one year prior, rising from $117.00 million to $149.00 million.
- The gross profit margin for COMERICA INC is currently very high, coming in at 96.08%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 22.43% is above that of the industry average.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 4.6%. Since the same quarter one year prior, revenues slightly dropped by 1.6%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- COMERICA INC has improved earnings per share by 29.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, COMERICA INC increased its bottom line by earning $3.15 versus $2.86 in the prior year. For the next year, the market is expecting a contraction of 3.2% in earnings ($3.05 versus $3.15).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Commercial Banks industry and the overall market, COMERICA INC's return on equity is below that of both the industry average and the S&P 500.
- You can view the full Comerica Ratings Report.
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