Stock (Symbol) |
TD Bank (TD) |
Stock Price |
$42 |
Sector |
| Financial |
Data is as of |
| March 26, 2016 |
Expected to Report |
| May 26 |
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 but has most of its locations across the eastern US. TD had been in decline the past two years as oil prices fell. But now the Loonie (nickname for the Canadian dollar) is rising and that’s helped profit estimates at TD. During the last 4 qtrs TD’s 2016 profit estimate (in USD) have gone from $3.78 to $3.63 and down to $3.43 before rebounding to $3.66 this qtr. Now 2016 profits are expected to climb 12%, and the stock sells for 11x earnings. Historically, TD has traded at 14x earnings, so there’s good long-term upside here. The stock also has a nice yield of almost 4% and an above average safety rating. Canada’s economy remains sluggish, as low oil prices have crushed exports while imports are expensive. The Canadian government has slashed interest rates to try and jump-start the economy, but that hurts banks. TD is expected to have profit growth of 0%, 1%, 13% and 6% the next 4 qtrs which isn’t great but these numbers just did increase. TD is a good relatively safe stock with a nice dividend and low volatility. The stock has an estimated long-term growth rate of 7% per year in addition to a 4% yield. |
One Year Chart |
 Rather anemic profit growth the last 4 qtrs, and Estimates don’t look any better. But TD beat the street by 4 cents last qtr and if it does that this qtr it will produce 5% profit growth. What’s good about this stock is the 11 P/E. Buy-and-hold investors are getting a good deal here, but more growth oriented people might get bored with this stock. |
Fair Value |
 My current Fair Value is 12x earnings, which gives the stock modest upside from here. Looking further out, I imagine the stock can sell for 14x earnings again. |
Bottom Line |
 Analysts predict Toronto Dominion Bank will grow profits 7% a year long-term and if you add in the 4% yield you might have a double-digit grower. But that all depends on oil prices and the Canadian dollar. Fortunately both have been doing well recently. TD ranks 34th of 34 stocks in the Conservative Growth Power Rankings. |
Power Rankings |
Growth Stock Portfolio
N/AAggressive Growth Portfolio N/AConservative Stock Portfolio 34 of 34 |
