Canada’s Big 5 Banks: Which One is Best for Investors?

With the recent slide in TD’s (TSE:TD) stock, we examine whether this is a buying opportunity compared to the other of Canada’s Big 5 Banks

SmallCapPower | April 10, 2017: TD Bank Group (TSX: TD) has fallen just under 10% on news that the Company uses aggressive sales tactics and pressured employees to meet sales targets. We know that a correction in the market value of a stock improves its valuation metrics and increases the dividend yield, but has TD fallen enough to be considered the best value among Canada’s Big 5 Banks? Today, we compare revenue growth and the forward Price to Earnings Per Share (P/EPS) metric to find the best bang-for-buck among the Canadian financial services industry. The P/EPS is a valuation multiple used to measure how much the share costs per dollar of earnings. Additionally, revenue growth is a good judgement of a company’s ability to grow or sustain dividends, as well as potential capital gains. It appears that TD may not necessarily be the best pick of the bunch.

Win Big With Our Small Cap Picks


Toronto-Dominion Bank (TSX: TD) – $66.34

Toronto-Dominion Bank (the Bank) is a Canada-based bank, which operates in North America. It is an online financial services firm, with over 10.2 million online and mobile customers. Its segments include Canadian Retail, U.S. Retail, Wholesale Banking and Corporate. The Canadian Retail segment provides a range of financial products and services to customers in the Canadian personal and commercial banking businesses. The U.S. Retail segment consists of its retail and commercial banking operations operating under the brand TD Bank, and wealth management services in the United States. The Wholesale Banking segment provides a range of capital markets, investment banking, and corporate banking products and services, including underwriting and distribution of new debt and equity issues, providing advice on strategic acquisitions and divestitures, funding and investment needs of its clients.

  • Market Cap: $92.0 billion
  • Revenue Growth (NTM/LTM): -1%
  • P/EPS (NTM): 12.1x
  • Dividend Yield: 3.7%

Bank of Nova Scotia (TSX: BNS) – $78.72

The Bank of Nova Scotia is an international bank and a financial services provider in North America, Latin America, the Caribbean and Central America, and Asia-Pacific. The Bank offers a range of advice, products and services, including personal and commercial banking, wealth management and private banking, corporate and investment banking, and capital markets. Its segments include Canadian Banking, which provides a suite of financial advice and banking solutions to retail, small business, commercial and wealth management customers in Canada; International Banking, which provides a range of financial products, solutions and advice to retail and commercial customers in select regions outside of Canada; Global Banking and Markets, which provides corporate banking, investment banking, capital markets and transaction banking solutions.

  • Market Cap: $71.0 billion
  • Revenue Growth (NTM/LTM): 1%
  • P/EPS (NTM): 11.8x
  • Dividend Yield: 4.0%

Royal Bank of Canada (TSX: RY) – $97.81

Royal Bank of Canada (RBC) is a diversified financial services company that provides personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. The Company serves personal, business, public sector and institutional clients in Canada, the United States and approximately 40 other countries. The Company’s business segments include Personal and Commercial Banking, Wealth Management, Insurance, Investor and Treasury Services, Capital Markets.

  • Market Cap: $107.6 billion
  • Revenue Growth (NTM/LTM): -2%
  • P/EPS (NTM): 12.8x
  • Dividend Yield: 3.7%

Bank of Montreal (TSX: BMO) – $99.95

Bank of Montreal (the Bank) is a financial services provider that provides a range of personal and commercial banking, wealth management and investment banking products and services. The Bank conducts its business through three operating groups: Personal and Commercial Banking (P&C), Wealth Management and BMO Capital Markets. The P&C business includes two retail and business banking operating segments, such as Canadian Personal and Commercial Banking (Canadian P&C), and the United States Personal and Commercial Banking (U.S. P&C). The Bank’s Wealth Management business serves a range of client segments, from mainstream to ultra-high net worth and institutional, with an offering of wealth management products and services, including insurance. BMO Capital Markets is a North American-based financial services provider offering a range of products and services to corporate, institutional and government clients.

  • Market Cap: $48.6 billion
  • Revenue Growth (NTM/LTM): -3%
  • P/EPS (NTM): 12.1x
  • Dividend Yield: 3.7%

Canadian Imperial Bank of Commerce (TSX: CM) – $115.57

Canadian Imperial Bank of Commerce (CIBC) is a global financial institution that provides a range of financial products and services to approximately 11 million individual, small business, commercial, corporate and institutional clients in Canada and around the world. The Company operates through three segments: Retail and Business Banking, Wealth Management and Capital Markets. The Company’s Retail and Business Banking segment provides personal and business clients across Canada with financial advice, products and services in its banking centers or through remote channels, such as mobile advisors, telephone, online or mobile banking. The Company’s Wealth Management segment provides advice and investment solutions. The Company’s Capital Markets segment provides integrated credit and global markets products, investment banking advisory services and research to corporate, government and institutional clients around the world.

  • Market Cap: $34.4 billion
  • Revenue Growth (NTM/LTM): 0%
  • P/EPS (NTM): 10.6x
  • Dividend Yield: 4.6%

Disclosure: Neither the author nor any of the principals at Small Cap Power, or their family members, own shares in any of the companies mentioned above.

The Content contained on this page (including any facts, views, opinions, recommendations, description of, or references to, products or securities) made available by SmallCapPower/Ubika Research is for information purposes only and is not tailored to the needs or circumstances of any particular person. Any mention of a particular security is merely a general discussion of the merits and risks associated there with and is not to be used or construed as an offer to sell, a solicitation of an offer to buy, or an endorsement, recommendation, or sponsorship of any entity or security by SmallCapPower/Ubika Research. To read more of this Disclaimer please click on the button below: