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, except for BMO, the current dividend yields were above the historical median dividend yield. The stock prices this year are reasonable and all but BMO is below are below the relative median.
| Bank 2019 | Symbol | Price | Dividend | Yield | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $97.24 | $4.00 | 4.11% | -4.11% |
| Bank of Nova Scotia | BNS | $73.57 | $3.40 | 4.62% | 12.72% |
| CIBC | CM | $110.24 | $5.44 | 4.93% | 13.70% |
| Royal Bank | RY | $99.06 | $3.92 | 3.96% | 7.24% |
| National Bank | NA | $60.86 | $2.60 | 4.27% | 8.43% |
| TD Bank | TD | $72.83 | $2.68 | 3.68% | 6.05% |
Last year all the banks had a current dividend yield below the historical median dividend yield. The stock prices were reasonable but above the 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% |
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 2019, the banks of BNS, CIBC and RY showed a price that was reasonable and below the median. For BMO, National Bank and TD the price is relatively reasonable but above the median. Prices are again relatively cheaper in 2019.
| Bank 2019 | Symbol | Price | BVPS | Current P/B | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $97.24 | $64.73 | 1.50 | 3.60% |
| Bank of Nova Scotia | BNS | $73.57 | $49.75 | 1.48 | -20.07% |
| CIBC | CM | $110.24 | $73.83 | 1.49 | -22.23% |
| Royal Bank | RY | $99.06 | $51.11 | 1.94 | -2.11% |
| National Bank | NA | $60.86 | $34.40 | 1.77 | 1.68% |
| TD Bank | TD | $72.83 | $40.45 | 1.80 | 11.83% |
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 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 2019, all the banks but BMO has a lower price than the median. This mean they are showing as reasonable and below the median. CIBC is almost cheap. This testing again shows that the 2019 prices are relatively cheaper than the 2018 where only one bank, CIBC has a price below the median.
| Bank 2019 | Symbol | Price | Graham Price | P/GP Ratio | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $97.24 | $113.47 | 0.86 | 2.02% |
| Bank of Nova Scotia | BNS | $73.57 | $90.21 | 0.82 | -11.35% |
| CIBC | CM | $110.24 | $144.96 | 0.76 | -19.10% |
| Royal Bank | RY | $99.06 | $101.51 | 0.98 | -5.26% |
| National Bank | NA | $60.86 | $69.77 | 0.87 | -0.88% |
| TD Bank | TD | $72.83 | $78.56 | 0.93 | -4.43% |
In the 2018 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.
| 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% |
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 this test for 2019, all the banks are showing a price that is relatively reasonable and below the median. Here again, the 2019 bank prices are relatively better than in 2018.
| Bank 2019 | Symbol | Price | 2019 EPS Est. | Curr P/E | Re Med |
|---|---|---|---|---|---|
| Bank of Montreal | BMO | $97.24 | $8.84 | 11.00 | -3.68% |
| Bank of Nova Scotia | BNS | $73.57 | $7.27 | 10.12 | -10.37% |
| CIBC | CM | $110.24 | $12.65 | 8.71 | -13.55% |
| Royal Bank | RY | $99.06 | $8.96 | 11.06 | -8.55% |
| National Bank | NA | $60.86 | $6.29 | 9.68 | -8.89% |
| TD Bank | TD | $72.83 | $6.78 | 10.74 | -13.44% |
In 2018 the stock price is showing as relatively reasonable, but above the median for all banks. In 2018 the TD bank’s current ratio is 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% |
On my other blog I wrote yesterday about Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more. Next, I will write about ARC Resources Ltd. (TSX-ARX, OTC-AETUF) ... learn more on Wednesday, February 13, 2019 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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