Is Comerica’s 2025 Rally Still Rewarding After a 50% Gain in the Past Year?

• Wondering if Comerica is still a smart buy after its big rebound, or if most of the upside is already priced in? In this article we unpack what the current share price might really be telling us about future returns and risk.
• Comerica's stock has pulled back about 1.3% over the last week, but is still up 13.1% over the past month and 43.6% year to date, with a 50.7% gain over the last year and 98.7% over five years. That kind of run naturally raises the question of whether the market is getting ahead of itself.
• Recent headlines around regional banks have focused on shifting interest rate expectations and regulatory scrutiny. Both of these factors can quickly change how investors view balance sheet risk. At the same time, sentiment toward financially solid regional lenders like Comerica has improved as markets reassess the worst case scenarios that dominated the narrative in prior years.
• Despite this strong share price performance, Comerica currently scores just 0/6 on our valuation checks. This suggests the stock does not screen as undervalued on any of our standard metrics right now. In the sections that follow we will dig into those valuation approaches and finish with a more holistic way to think about what Comerica is really worth.

Comerica scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Comerica Excess Returns Analysis

The Excess Returns model looks at how much profit Comerica can generate above the required return that shareholders demand, then capitalizes those extra profits to estimate what the business should be worth today.

For Comerica, the starting point is a Book Value of $55.15 per share and a Stable EPS of $5.92 per share, based on weighted future return on equity estimates from 14 analysts. With an Average Return on Equity of 10.08% and a Cost of Equity of $4.82 per share, the model calculates an Excess Return of $1.10 per share, meaning Comerica is projected to earn more than its theoretical cost of capital on its equity base.

Using a Stable Book Value of $58.73 per share, informed by estimates from 12 analysts, these excess returns are projected forward and discounted back to today. This yields an intrinsic value of about $81 per share. Compared with the current market price, the model implies Comerica is roughly 9.0% overvalued, so the recent rally appears slightly ahead of fundamentals.

Result: ABOUT RIGHT

Comerica is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Comerica.

Approach 2: Comerica Price vs Earnings

For a consistently profitable bank like Comerica, the price to earnings ratio is a useful yardstick because it directly links what investors pay today to the profits the business is generating each year. In general, faster earnings growth and lower perceived risk justify a higher PE multiple, while slower growth or higher risk point to a lower, more conservative range.

Comerica currently trades on a PE of about 16.3x. That is above the Banks industry average of roughly 11.9x and also a touch higher than the 15.5x average for its peers, suggesting the market is already pricing in stronger prospects or a higher quality profile. Simply Wall St goes a step further with its Fair Ratio, an estimate of what a reasonable PE should be once you factor in Comerica’s specific earnings growth outlook, profitability, risk profile, industry and market cap.

This Fair Ratio comes out at 11.9x, noticeably below the current 16.3x valuation. Because this proprietary measure is tailored to Comerica rather than based on blunt comparisons, it implies the shares are trading ahead of what its fundamentals would typically support.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Comerica Narrative

Earlier we mentioned that there is an even better way to understand valuation. Let us introduce you to Narratives, a simple way to build a clear story about Comerica’s future around your numbers. You can link your assumptions for revenue, earnings and margins to a forecast, to a fair value, and finally to a buy or sell decision, all inside Simply Wall St’s Community page where millions of investors share views. Investors can compare the fair values from their Narratives to the current share price and automatically see those Narratives update as fresh news or earnings arrive. For example, one investor might build a bullish Comerica Narrative around Sunbelt growth, digital innovation and merger benefits to arrive at a fair value near the higher end of recent targets around $81 per share. Another might focus on flat long term loan growth, rising expenses and regional concentration risks to anchor a more cautious view closer to the low analyst target near $56. This gives you an accessible way to choose, customize, and act on the Comerica story that best fits your own expectations.

Do you think there's more to the story for Comerica? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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