Canadian Imperial Bank of Commerce is the country’s best-valued bank stock after lagging its peers to date this year, says Robert Sedran, analyst at CIBC World Markets.
“The bank’s share price has underperformed the audience by almost 3% in the last three months and it is shares trade at a wider discount compared to 10-year historical average,” Mr. Sedran said inside a note to clients.
Mr. Sedran’s valuation ranking is based on several metrics, including amount of the parts, dividend discount model, discounted income, relative excess capital, price/earning in accordance with history, profitability, pre-tax, pre-provision earnings multiples and EPS volatility.
Bank of Nova Scotia ranks second on his valuation scorecard, accompanied by Royal Bank of Canada and National Bank of Canada.
Bank of Montreal is next followed by Toronto-Dominion Bank, which fell within the ranking because of “strong share price outperformance versus the group, which was helped by optimism over the U.S. outlook.”
Mr. Sedran said banks, down five percent since the beginning of the year, continue to show resilience inside a tough operating environment, but he expects the negative impacts from lower oil prices will grow within the weeks ahead.
Despite his latest valuation rankings, he continues to rate Royal Bank and TD as his 3 sector uutperformer banks (he does not cover CIBC).