I will start off with my favourite measure of for determining if the current stock price is relatively good or not. My favourite measure is to compare the current dividend yield with the historical dividend yield. The last column shows difference between the current dividend yield and the historical median dividend yield.
What you want is a current dividend yield equal to or above the historical median dividend yield. For all banks this year, the current dividend yields were below the historical median dividend yield. Last year only the National Bank had a current dividend yield above the historical median dividend yield. The stock prices this year are still reasonable, but they are above the relative median.
| Bank 2018 | Symbol | Price | Dividend | Yield | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $104.44 | $3.72 | 3.56% | -16.97% |
| Bank of Nova Scotia | BNS | $81.99 | $3.16 | 3.85% | -3.89% |
| CIBC | CM | $122.53 | $5.20 | 4.24% | -1.08% |
| Royal Bank | RY | $107.72 | $3.64 | 3.38% | -11.08% |
| National Bank | NA | $65.08 | $2.40 | 3.69% | -7.34% |
| TD Bank | TD | $74.08 | $2.40 | 3.24% | -4.71% |
| Bank 2017 | Symbol | Price | Dividend | Yield | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $100.66 | $3.52 | 3.50% | -18.49% |
| Bank of Nova Scotia | BNS | $78.61 | $2.96 | 3.77% | -3.94% |
| CIBC | CM | $113.16 | $4.96 | 4.38% | 3.13% |
| Royal Bank | RY | $94.47 | $3.32 | 3.51% | -10.35% |
| National Bank | NA | $56.54 | $2.24 | 3.96% | 0.55% |
| TD Bank | TD | $68.35 | $2.20 | 3.22% | -3.63% |
The next checking of the stock price I will look at is using the Price/Book Value per Share Ratio. Here you want the current P/B Ratio to be lower than the 10 year median P/B. Ratio. Here the last column shows how much above or below the current P/B Ratio is compared to the 10 year median P/B Ratio.
In this test for 2018 only BNS and CIBC showed a price that was reasonable and below the median. For BMO and Royal Bank, the price is relatively reasonable but above the median. For National Bank and TD the stock price is showing as relatively expensive. Price is relatively expensive if the difference between the current P/B and 10 year median is 20% or more.
| Bank 2018 | Symbol | Price | BVPS | Current P/B | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | 104.44 | $63.47 | 1.65 | 11.95% |
| Bank of Nova Scotia | BNS | 81.99 | $46.24 | 1.77 | -5.69% |
| CIBC | CM | 122.53 | $66.55 | 1.84 | -6.06% |
| Royal Bank | RY | 107.72 | $46.41 | 2.32 | 14.90% |
| National Bank | NA | 65.08 | $31.51 | 2.07 | 24.43% |
| TD Bank | TD | 74.08 | $37.89 | 1.96 | 21.45% |
In 2017 both BNS and CIBC showed a stock price that was relatively reasonable and below the median. All the other banks show a price that was relatively reasonable but above the median.
| Bank 2017 | Symbol | Price | BVPS | Current P/B | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $100.66 | $60.49 | 1.66 | 8.76% |
| Bank of Nova Scotia | BNS | $78.61 | $43.59 | 1.80 | -7.53% |
| CIBC | CM | $113.16 | $56.59 | 2.00 | -1.50% |
| Royal Bank | RY | $94.47 | $43.32 | 2.18 | 5.85% |
| National Bank | NA | $56.54 | $28.52 | 1.98 | 13.93% |
| TD Bank | TD | $68.35 | $36.69 | 1.86 | 15.57% |
In another test I look at the Price/Graham Price Ratio compared to the 10 year median P/GP Ratio. You want the current P/GP Ratio to be lower than the 10 year median P/GP Ratio. Here again the last column says how much the current P/GP Ratio is above or below the 10 year median P/GP Ratio.
In both the 2018 testing and the 2017 testing only CIBC had a current P/GP Ratio lower than the 10 year median P/GP Ratio. In 2018 all the other banks were showing a stock price that was relatively reasonable but above the median. In 2017 only BNS was showing a stock price that was relatively expensive.
| Bank 2018 | Symbol | Price | Graham Price | P/GP Ratio | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $104.44 | $108.87 | 0.96 | 11.55% |
| Bank of Nova Scotia | BNS | $81.99 | $81.51 | 1.01 | 8.16% |
| CIBC | CM | $122.53 | $128.34 | 0.95 | -1.57% |
| Royal Bank | RY | $107.72 | $91.12 | 1.18 | 9.46% |
| National Bank | NA | $65.08 | $63.90 | 1.02 | 18.42% |
| TD Bank | TD | $74.08 | $68.66 | 1.08 | 11.23% |
| Bank 2017 | Symbol | Price | Graham Price | P/GP Ratio | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $100.66 | $101.57 | 0.99 | 13.91% |
| Bank of Nova Scotia | BNS | $78.61 | $64.37 | 1.22 | 31.31% |
| CIBC | CM | $113.16 | $114.52 | 0.99 | -4.99% |
| Royal Bank | RY | $94.47 | $82.55 | 1.14 | 0.39% |
| National Bank | NA | $56.54 | $56.93 | 0.99 | 12.86% |
| TD Bank | TD | $68.35 | $64.12 | 1.07 | 8.77% |
The last test on stock price test to look at is to compare the current Price/Earnings Ratio to the 5 year median P/E Ratio. In both 2018 and 2017 the stock price is showing as relatively reasonable, but above the median for all banks. In both years the TD bank's current ratio was the closes to the 5 year median.
| Bank 2018 | Symbol | Price | 2018 EPS Est. | Curr P/E | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $104.44 | $8.30 | 12.58 | 10.19% |
| Bank of Nova Scotia | BNS | $81.99 | $6.39 | 12.84 | 13.44% |
| CIBC | CM | $122.53 | $11.00 | 11.14 | 12.62% |
| Royal Bank | RY | $107.72 | $7.95 | 13.55 | 18.44% |
| National Bank | NA | $65.08 | $5.76 | 11.30 | 6.39% |
| TD Bank | TD | $74.08 | $5.53 | 13.40 | 6.07% |
| Bank 2017 | Symbol | Price | 2017 EPS Est. | Curr P/E | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $100.66 | $7.58 | 13.28 | 17.21% |
| Bank of Nova Scotia | BNS | $78.61 | $6.31 | 12.46 | 10.05% |
| CIBC | CM | $113.16 | $10.30 | 10.99 | 11.09% |
| Royal Bank | RY | $94.47 | $6.99 | 13.52 | 19.29% |
| National Bank | NA | $56.54 | $5.05 | 11.20 | 5.42% |
| TD Bank | TD | $68.35 | $5.40 | 12.66 | 0.22% |
On my other blog I wrote yesterday about Valener Inc. (TSX-VNR, OTC-VNRCF)... learn more. Next, I will write about Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR)... learn more on Wednesday, January 31, 2018 around 5 pm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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