Stock (Symbol) |
TD Bank (TD) |
Stock Price |
$43 |
Sector |
| Financial |
Data is as of |
| July 14, 2016 |
Expected to Report |
| Aug 25 |
Company Description |
 TD operates as a bank in North America. TD conducts its business through segments, such as Canadian Retail, U.S. Retail, Wholesale Banking and Corporate. Canadian Retail provides a range of financial products and services to customers in the Canadian personal and commercial banking businesses, including credit cards, auto finance, wealth and insurance businesses. U.S. Retail consists of the Bank’s retail and commercial banking operations operating under the brand TD Bank, America’s Most Convenient Bank, and wealth management services in the United States. Wholesale Banking provides a range of capital markets, investment banking, and corporate banking products and services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, and meeting the daily trading, funding and investment needs of its clients. TD is also an online financial services firm. Source: Thomson Financial |
Sharek’s Take |
 Toronto Dominion Bank (TD), better known as TD Bank, is Canada’s 2nd largest bank with a concentration in Southern Canada and the eastern US. Canada has had been experiencing sluggish economic growth, but now the outlook is brighter. Canada is an exporter of oil, and low oil prices made it hard on producing provinces Alberta, Saskatchewan, Newfoundland and Labrador. The cut in income was to the equivalent of $1500 per year for each Canadian citizen. Now oil has rebounded, but TD’s Canadian divisions only had 1% growth last qtr. On the other hand retail business in the U.S. climbed a solid 6% (U.S. is around a third of sales). Profits also rose 6% last qtr, up from 2% the qtr earlier. Six percent is also TD’s Estimated Long Term Growth Rate. Since the stock pays a yield of close to 4%, that’s an estimated long-term total return of 10% a year. With qtrly profit estimates of 2%, 13% and 8% ahead TD may have turned the corner and could get back to 14x earnings which is a $51 this year and $54 in 2017 (stock’s $43 now). That would be a respectable return for a conservative bank stock. |
One Year Chart |
 Profits rose 6% last qtr on a 6% gain in sales. 2016 Annual Profit estimates the last 4 qtrs have gone from $3.63, $3.43, $3.66 to now $3.67 the last 4 qtrs and look to have stabilized, which gives investors confidence. Qtrly profit estimates for the next 4 qtrs are: 2%, 13%, 8% and 0%. The 0% qtr might get upped as analysts have to re-do numbers after TD beat the street by 5% last qtr — the second qtr in a row its beaten analyst estimates. Good. |
Fair Value |
 TD Bank (it’s really Toronto-Dominion but here in the U.S. my clients are more familiar with TD branches) sells for just 12x earnings, up from 11x earnings last qtr. Still, when you look at the Profit History table to the right what jumps out is the stock has usually sold for 14x earnings. So with fundamentals improving, shouldn’t the P/E go back to 14? I think so. |
Bottom Line |
 TD Bank gives investors a conservative bank stock with a fat yield a double-digit estimated total annual return. Now that things have turned up for the company I feel the stock can get the 14x earnings valuation back. Still, TD ranks just 36th of 38 stocks in the Conservative Growth Power Rankings because it’s a really slow grower and the stock could continue to sit here a while. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 36 of 38 |
