Is Comerica (CMA) Still a Buy After a 51% Surge? A Valuation Deep Dive

The recent 51% surge in Comerica Inc. (CMA) has sparked intense debate among investors about whether the stock remains a compelling buy. To assess this, one must dissect the interplay between market optimism and valuation realism. While the company's fundamentals suggest resilience, its current price appears to diverge significantly from intrinsic value estimates, raising questions about sustainability.

Valuation Realism: A Cautionary Picture

Comerica's valuation metrics paint a mixed but ultimately concerning picture. According to a report by Simply Wall St, the stock's intrinsic value, calculated using the Excess Returns model, stands at approximately $81 per share as of 2025. This estimate is derived from a book value of $55.15 per share, stable earnings per share (EPS) of $5.92, and an average return on equity (ROE) of 10.08%. However, the stock is currently trading 9.0% above this intrinsic value, signaling potential overvaluation.

The price-to-earnings (P/E) ratio further underscores this divergence. At 16.34x, Comerica's P/E exceeds both the banks industry average of 11.94x and the 15.53x average for its closest peers according to data. A proprietary fair P/E ratio of 11.90x, calculated by Simply Wall St, suggests the stock is meaningfully overvalued relative to its fundamentals. This disconnect between price and earnings multiples is a red flag for value investors, who typically seek alignment between market price and intrinsic worth.

Market Optimism: Analysts' Mixed Signals

Despite these valuation concerns, market optimism persists. As of late 2025, 23 to 42 analysts have evaluated CMA, with a consensus rating of "Hold." While 12% of analysts recommend a "Strong Buy" and 19% a "Buy," 55% advise holding the stock, and 14% recommend selling. The average price target of $74.14 to $74.55 implies a potential downside of 15.99% to 2.72% from the current price of $88.26. This suggests that, while not uniformly bearish, the analyst community views the stock as overpriced relative to its projected performance.

Earnings forecasts add nuance. Analysts project 2025 EPS between $5.36 and $5.85, with an average of $5.36. This implies modest growth compared to the stable EPS of $5.92 cited in intrinsic value calculations. Meanwhile, net interest income is expected to grow by 6% to 7% in 2025, supported by a 26 basis point margin expansion to 3.06%. These figures highlight the bank's operational resilience but fall short of justifying the current valuation premium.

Fundamental Strengths and Risks

Comerica's Commercial Bank segment remains a cornerstone of its business, generating $1.84 billion in net interest income and $577 million in non-interest income over the trailing twelve months. The company's commitment to shareholder returns is also evident, with a quarterly dividend of 71 cents per share declared for January 2026. These factors underscore its appeal to income-focused investors.

However, the Finance segment's performance raises concerns. Its net interest income for the same period was a negative $841 million, a drag on overall profitability that could weigh on future growth. This segment's underperformance, coupled with the elevated valuation multiples, suggests that investors may be overestimating the bank's long-term earnings potential.

Conclusion: A Tenuous Balance

The case for Comerica hinges on a delicate balance between its operational strengths and valuation realities. While the company's earnings stability, dividend policy, and margin expansion offer a degree of optimism, the stock's current price appears disconnected from its intrinsic value and industry peers. Analysts' cautious "Hold" consensus and price targets below the current level further reinforce this view.

For investors, the key question is whether Comerica's fundamentals will justify its premium valuation over time. If the bank can sustain its earnings growth and address the drag from its Finance segment, the stock may yet deliver returns. However, at present, the valuation appears stretched, and prudence suggests a wait-and-watch approach. In the words of John Maynard Keynes, "It is better to lose money in the stock market than to lose it in the currency market." But in this case, the former risk may be greater than it seems.