What Happened?
Shares of financial services company Comerica (NYSE: CMA) jumped 3% in the afternoon session after the company reported fourth-quarter earnings that surpassed analyst expectations.
Results were supported by a rise in net interest income, fee income, and deposit balances. The financial services company announced adjusted earnings per share of $1.46, which was higher than the consensus estimate of $1.28. Sales for the quarter also increased by 3.3% compared to the previous year, reaching $850 million. Net income available to common shareholders also grew by 3.5% from the year-ago quarter. The positive report came as the company prepared for its acquisition by Fifth Third Bancorp, which was expected to close in the near future.
After the initial pop the shares cooled down to $96.64, up 3.4% from previous close.
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What Is The Market Telling Us
Comerica’s shares are not very volatile and have only had 8 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock gained 15.8% on the news that Fifth Third Bancorp announced it would acquire the company in a $10.9 billion all-stock deal. The transaction valued Comerica at $82.88 a share, a premium of over 17% compared to its previous closing price. Under the agreement's terms, Comerica shareholders were to receive 1.8663 shares of Fifth Third for each Comerica share they held. The merger was set to create one of the ten largest banks in the U.S., with assets totaling nearly $290 billion. This acquisition marked the largest deal for a U.S. bank since late 2021.
Comerica is up 9% since the beginning of the year, and at $96.64 per share, has set a new 52-week high. Investors who bought $1,000 worth of Comerica’s shares 5 years ago would now be looking at an investment worth $1,557.
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