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Let's talk about the popular Comerica Incorporated (NYSE:CMA). The company's shares received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to $82.9 at one point, and dropping to the lows of $68.82. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Comerica's current trading price of $69.49 reflective of the actual value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Comerica’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
Is Comerica still cheap?
Great news for investors – Comerica is still trading at a fairly cheap price. My valuation model shows that the intrinsic value for the stock is $129.47, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Comerica’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Comerica generate?
Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a negative profit growth of -6.6% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Comerica. This certainty tips the risk-return scale towards higher risk.
What this means for you:
Are you a shareholder? Although CMA is currently undervalued, the negative outlook does bring on some uncertainty, which equates to higher risk. Consider whether you want to increase your portfolio exposure to CMA, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping tabs on CMA for some time, but hesitant on making the leap, I recommend you dig deeper into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Comerica. You can find everything you need to know about Comerica in the latest infographic research report. If you are no longer interested in Comerica, you can use our free platform to see my list of over 50 other stocks with a high growth potential.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.