Critical Comparison: Comerica (CMA) versus Northwest Bancshares (NWBI)

Critical Comparison: Comerica (CMA) versus Northwest Bancshares (NWBI)

Comerica (NYSE:CMA) and Northwest Bancshares (NASDAQ:NWBI) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.

Institutional and Insider Ownership

86.1% of Comerica shares are owned by institutional investors. Comparatively, 74.4% of Northwest Bancshares shares are owned by institutional investors. 1.0% of Comerica shares are owned by company insiders. Comparatively, 1.4% of Northwest Bancshares shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Comerica and Northwest Bancshares’ revenue, earnings per share and valuation.

Comerica has higher revenue and earnings than Northwest Bancshares. Comerica is trading at a lower price-to-earnings ratio than Northwest Bancshares, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Comerica and Northwest Bancshares’ net margins, return on equity and return on assets.

Volatility and Risk

Comerica has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, Northwest Bancshares has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings for Comerica and Northwest Bancshares, as reported by MarketBeat.com.

Comerica currently has a consensus target price of $91.90, indicating a potential upside of 21.13%. Given Comerica’s stronger consensus rating and higher probable upside, analysts plainly believe Comerica is more favorable than Northwest Bancshares.

Dividends

Comerica pays an annual dividend of $2.68 per share and has a dividend yield of 3.5%. Northwest Bancshares pays an annual dividend of $0.72 per share and has a dividend yield of 4.2%. Comerica pays out 37.0% of its earnings in the form of a dividend. Northwest Bancshares pays out 70.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Comerica has increased its dividend for 7 consecutive years and Northwest Bancshares has increased its dividend for 3 consecutive years.

Summary

Comerica beats Northwest Bancshares on 14 of the 18 factors compared between the two stocks.

About Comerica

Comerica Incorporated, through its subsidiaries, provides various financial products and services. It operates through three segments: Business Bank, Retail Bank, and Wealth Management. The Business Bank segment offers various products and services, including commercial loans and lines of credit, deposits, cash management, capital market products, international trade finance, letters of credit, foreign exchange management services, and loan syndication services middle market businesses, multinational corporations, and governmental entities. The Retail Bank segment provides personal financial services, such as consumer lending, consumer deposit gathering, and mortgage loan origination. It also offers various consumer products that include deposit accounts, installment loans, credit cards, student loans, home equity lines of credit, and residential mortgage loans. The Wealth Management segment provides products and services comprising fiduciary, private banking, retirement, investment management and advisory, and investment banking and brokerage services. It also sells annuity products; and life, disability, and long-term care insurance products. The company also engages in the securities portfolio, and asset and liability management activities. It operates in Texas, California, and Michigan, as well as in Arizona and Florida, Canada, and Mexico. The company was formerly known as DETROITBANK Corporation and changed its name to Comerica Incorporated in July 1982. Comerica Incorporated was founded in 1849 and is headquartered in Dallas, Texas.

About Northwest Bancshares

Northwest Bancshares, Inc. is a holding company. It offers personal & business banking products including employee benefits, investment management services, insurance and trust. It engages in collecting deposits and making loans secured by various types of collateral, including real estate and other assets. The company was founded on June 29, 2001 and is headquartered in Warren, PA.

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