Tuesday, February 8, 2022

Banks and Ratios 2

What I want to look at today is the relative stock price using different criterion between last year when I reviewed the banks and this year. Since I published Banks and Ratios in January, all the bank’s stock prices have gone up. This entry uses the most recent prices.

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.

In 2022 all but the BNS has a dividend yield below the historical median dividend yields. They are all within the reasonableness range. On this basis the BNS is relatively cheaper than all the other banks.

Bank 2022 Symbol Price Dividend Yield M/C
Bank of Montreal BMO $150.04 $5.32 3.55% -15.78%
Bank of Nova Scotia BNS $94.48 $4.00 4.23% 2.76%
CIBC CM $166.52 $6.44 3.87% -13.09%
Royal Bank RY $147.14 $4.80 3.26% -15.71%
National Bank NA $103.75 $3.48 3.35% -15.72%
TD Bank TD $107.41 $3.56 3.31% -5.30%

In 2021 National Bank had a dividend yield below the historical median dividend yields, but still within a reasonable range. All the rest had dividend yields above the historical median dividend yields and therefore reasonable. Also, both BNS and TD Bank are showing the stock price as cheap.

Bank 2021 Symbol Price Dividend Yield M/C
Bank of Montreal BMO $97.60 $4.24 4.34% 1.26%
Bank of Nova Scotia BNS $69.40 $3.60 5.19% 26.21%
CIBC CM $111.06 $5.84 5.26% 18.97%
Royal Bank RY $107.36 $4.32 4.02% 2.65%
National Bank NA $73.55 $2.84 3.86% -3.95%
TD Bank TD $73.58 $3.16 4.29% 22.70%

The next checking of the stock price I will look at is using the Price/Sales Ratio. Here for a reasonable or cheap stock price you want the current P/S Ratio to be lower than the 10 year median ratio.

In 2022 only BNS has a P/S Ratio within the reasonableness range. All the other banks are showing that the stock price is expensive based on P/S Ratio testing as all the current P/S Ratios are more than 20% above the 10 year median P/S Ratio.

Bank 2022 Symbol Price Rev / Share P/S Ratio M/C
Bank of Montreal BMO $150.04 $41.38 3.63 45.04%
Bank of Nova Scotia BNS $94.48 $26.58 3.55 15.41%
CIBC CM $166.52 $47.58 3.50 32.57%
Royal Bank RY $147.14 $34.79 4.23 35.56%
National Bank NA $103.75 $28.11 3.69 30.88%
TD Bank TD $107.41 $22.99 4.67 48.01%

In 2021 only BNS had ratios lowered than the 10 year ratio. The rest have stock price that are reasonable, but above the median. BMO, BNS, National Bank and TD Bank are all relatively cheaper in 2021 than in 2020.

Bank 2021 Symbol Price Rev/Share P/S Ratio M/C
Bank of Montreal BMO $97.60 $36.58 2.67 6.72%
Bank of Nova Scotia BNS $69.40 $24.99 2.78 -13.75%
CIBC CM $111.06 $42.35 2.62 3.87%
Royal Bank RY $107.36 $32.00 3.36 11.46%
National Bank NA $73.55 $24.52 3.00 7.83%
TD Bank TD $73.58 $21.62 3.40 7.82%

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.

For this test in 2022, BNS, CIBC and RY are showing a stock price still within the reasonableness range. BMO, NA and TD are showing the stock price as relatively expensive as their current P/B Ratio is more than 20% higher than the 10 year median P/B Ratio.

Bank 2022 Symbol Price BVPS Current P/B M/C
Bank of Montreal BMO $150.04 $80.18 1.87 35.60%
Bank of Nova Scotia BNS $94.48 $53.28 1.77 11.53%
CIBC CM $166.52 $91.66 1.82 12.14%
Royal Bank RY $147.14 $65.22 2.26 18.12%
National Bank NA $103.75 $47.06 2.20 25.26%
TD Bank TD $107.41 $51.60 2.08 30.92%

In this test for 2021, the banks of BNS, CIBC showed a price that was relatively cheap. For BMO, Royal Bank and TD the price is relatively reasonable and below the median. For National Bank the price is relatively reasonable but above the median. Bank of Montreal, Royal Bank, National Bank and TD Bank are all relatively cheaper in 2021 compared to 2020.

Bank 2021 Symbol Price BVPS Curr P/B M/C
Bank of Montreal BMO $97.60 $79.34 1.23 -12.76%
Bank of Nova Scotia BNS $69.40 $51.85 1.34 -21.27%
CIBC CM $111.06 $83.67 1.33 -25.01%
Royal Bank RY $107.36 $56.86 1.89 -3.67%
National Bank NA $73.55 $38.91 1.89 7.40%
TD Bank TD $73.58 $49.80 1.48 -8.23%

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 2022, the banks of BNS, and CIBC are showing within the reasonableness range as the current P/GP Ratio is less than 20% above the 10 year median P/GP Ratio. The other banks are showing as expensive.

Bank 2022 Symbol Price Graham Pr P/GP Ratio M/C
Bank of Montreal BMO $150.04 $150.76 1.00 21.37%
Bank of Nova Scotia BNS $94.48 $99.57 0.95 11.63%
CIBC CM $166.52 $168.09 0.99 20.81%
Royal Bank RY $147.14 $127.63 1.15 17.64%
National Bank NA $103.75 $97.73 1.06 22.02%
TD Bank TD $107.41 $95.65 1.12 22.06%

In 2021, BMO, BNS, CIBC, and TD Bank are all showing current P/GP Ratios lower than 10 year median P/GP ratios. These banks are showing stock prices that are reasonable and below the median. The Royal Bank and National Bank are showing stock prices that are reasonable, but above the median. BMO and National Bank are relatively cheaper in 2021 compared to 2020.
Bank 2021 Symbol Price Graham Pr P/GP Ratio M/C
Bank of Montreal BMO $97.60 $122.53 0.80 -4.03%
Bank of Nova Scotia BNS $69.40 $83.88 0.83 -5.98%
CIBC CM $111.06 $139.92 0.79 -8.77%
Royal Bank RY $107.36 $104.95 1.02 1.28%
National Bank NA $73.55 $75.90 0.97 10.12%
TD Bank TD $73.58 $80.34 0.92 -2.57%

The last test on stock price test to look at is to compare the current Price/Earnings Ratio to the 10 year median P/E Ratio.

In 2022, the CIBC bank is showing as expensive as it has an EPS Ratio more than 20% above the 10 year median P/E Ratio. The other banks are still within the reasonableness range as their P/E Ratios are less than 20% above the 10 year median ratio.

Bank 2022 Symbol Price EPS Est. Curr P/E M/C
Bank of Montreal BMO $150.04 $12.60 11.91 7.18%
Bank of Nova Scotia BNS $94.48 $8.27 11.42 3.58%
CIBC CM $166.52 $13.70 12.15 26.22%
Royal Bank RY $147.14 $11.10 13.26 16.38%
National Bank NA $103.75 $9.02 11.50 17.01%
TD Bank TD $107.41 $7.88 13.63 18.84%

In 2021, by this criterion, BMO stock price is relatively the lowest. For all the stocks but the stock prices are showing as reasonable but above the median.

Bank 2021 Symbol Price EPS Est. Curr P/E M/C
Bank of Montreal BMO $97.60 $8.41 11.61 2.70%
Bank of Nova Scotia BNS $69.40 $6.03 11.51 6.86%
CIBC CM $111.06 $10.40 10.68 7.00%
Royal Bank RY $107.36 $8.61 12.47 8.15%
National Bank NA $73.55 $6.58 11.18 9.27%
TD Bank TD $73.58 $5.76 12.77 4.97%

On my other blog I wrote yesterday about Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. Next, I will write about Canadian Pacific Railway (TSX-CP, NYSE-CP) ... learn more on Wednesday, February 9, 2021 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.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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