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 2023, all the banks are relatively cheaper than last year. Royal and National have dividend yields higher than the 10 year median yield and are reasonable, but above the median. BNS is cheap. BMO and CIBC are reasonable and below the median. (I have changed my testing this year from historical yield to 10 year median yield. Banks are relatively cheap this year than last year.)
| Bank 2023 | Symbol | Price | Dividend | Yield | M/C |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $135.41 | $5.72 | 4.22% | 2.53% |
| Bank of Nova Scotia | BNS | $73.57 | $4.12 | 5.60% | 22.81% |
| CIBC | CM | $61.66 | $3.40 | 5.51% | 18.33% |
| Royal Bank | RY | $138.76 | $5.28 | 3.81% | -1.68% |
| National Bank | NA | $100.60 | $3.88 | 3.86% | -7.51% |
| TD Bank | TD | $93.01 | $3.84 | 4.13% | 8.93% |
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% |
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 2023, by this measure all the stocks are cheaper than in 2022. All the prices are reasonable, with BNX and CIBC being reasonable and below the median and the rest being reasonable and above the median.
| Bank 2023 | Symbol | Price | Rev/ Share | P/S Ratio | M/C |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | 135.41 | $47.34 | 2.86 | 11.73% |
| Bank of Nova Scotia | BNS | 73.57 | $28.50 | 2.58 | -13.95% |
| CIBC | CM | 61.66 | $25.60 | 2.41 | -12.73% |
| Royal Bank | RY | 138.76 | $38.72 | 3.58 | 13.05% |
| National Bank | NA | 100.6 | $31.26 | 3.22 | 8.72% |
| TD Bank | TD | 93.01 | $28.21 | 3.30 | 3.68% |
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% |
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 2023, all the stocks are cheap than in 2022. For, again, BNS and CIBC, the stock prices are reasonable and below the median and the rest are reasonable and above the median.
| Bank 2023 | Symbol | Price | BVPS | Current P/B | M/C |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $135.41 | $95.60 | 1.42 | 2.64% |
| Bank of Nova Scotia | BNS | $73.57 | $54.68 | 1.35 | -10.90% |
| CIBC | CM | $61.66 | $48.86 | 1.26 | -19.10% |
| Royal Bank | RY | $138.76 | $73.88 | 1.88 | -0.63% |
| National Bank | NA | $100.60 | $55.24 | 1.82 | 5.88% |
| TD Bank | TD | $93.01 | $58.07 | 1.60 | 0.74% |
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 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 2023, all the stock, by this test, are cheaper than in 2022. All the banks but National are reasonable and below the median. The National Bank is reasonable and above the median.
| Bank 2023 | Symbol | Price | Graham Pr | P/GP Ratio | M/C |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $135.41 | $171.03 | 0.79 | -12.03% |
| Bank of Nova Scotia | BNS | $73.57 | $101.18 | 0.73 | -11.33% |
| CIBC | CM | $61.66 | $87.53 | 0.70 | -13.03% |
| Royal Bank | RY | $138.76 | $140.17 | 0.99 | -0.01% |
| National Bank | NA | $100.60 | $109.41 | 0.92 | 5.69% |
| TD Bank | TD | $93.01 | $108.68 | 0.86 | -4.91% |
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% |
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 2023, all the stocks are showing as cheaper than in 2022, but TD Bank is close to the 2022 difference. In this test, BMO, BNS and CIBC are reasonable and below the median. The rest are reasonable and above the median.
| Bank 2023 | Symbol | Price | EPS Est. | Curr P/E | M/C |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $135.41 | $13.60 | 9.96 | -6.42% |
| Bank of Nova Scotia | BNS | $73.57 | $8.32 | 8.84 | -17.44% |
| CIBC | CM | $61.66 | $6.83 | 9.03 | -10.44% |
| Royal Bank | RY | $138.76 | $11.82 | 11.74 | 1.11% |
| National Bank | NA | $100.60 | $9.63 | 10.45 | 6.49% |
| TD Bank | TD | $93.01 | $9.04 | 10.29 | 15.34% |
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% |
On my other blog I wrote yesterday about ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more. Next, I will write about Manulife Financial Corp (TSX-MFC, NYSE-MFC) ... learn more on Wednesday, February 22, 2023 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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