Wednesday, December 8, 2010

TD Bank 2

This is a bank (TSX-TD) I own and it has published unaudited 4th quarter results. The bank results are starting to come in, so I start to review all the banks that I follow. Analysts feel that dividends on banks will be raised next year. TD says they will provide some clarity on dividends in the next several months.

In looking at the Insider Trading reports, what stands out clearly is that, typical for our banks, the insiders have far more stock options than shares, except for the directors. Over the past year, there has been $150M in insider selling and some $10M in insider buying. Mostly, insiders have been selling off their stock options, although the CEO seems to have kept some of his. The vast majority of the buying has been by directors. I guess it is a good sign that directors have been buying. Unfortunately, insider selling does not tell you very much and insider selling only amounts to about 1/4 of 1% of the market cap of the bank.

When I look at the P/E ratios, I get a 5 year median low of 10.7 and a 5 year median high of 15. The current P/E ratio of 10.9 I get is on the low side. When I look at the Graham Price, I get a current one of $83.73 and this is about 15% above the current stock price of $70.86. Before the recent recession, the stock price seldom got near the Graham Price.

For the Price/Book Value Ratio, I get a current one 1.47 and a 10 year average of 1.92. This is a sign of a good current price as the current P/B ratio is only some 77% of the 10 year average. The only place that does not show a good current price is the dividend yield. Of course, they have not raised the dividend for the last three years. The current dividend is 3.4% and the 5 year average is 3.6%.

When I look at what the analysts’ are saying, I find lots of Strong Buy, Buy and Hold recommendations and 1 Sell recommendation. I do not find any underperform recommendations. The consensus would be a buy recommendation. (See my site for information on analyst ratings.)

Analysts seem to think that this bank is well run. They also mention that TD will probably end up being a major player in the US. Others think that TD and Bank of Nova Scotia are the most likely banks to raise their dividends first. The stock price target over the next 12 months seems to be between $82 and $86.
This site has an interesting take on investing and it talks about the TD Bank.

I, of course, will be holding on to my TD Bank stock. I have too much in financials, so I will not be buying anymore.

They are a bank with full range of financial products and services for individuals and corporations in Canada, USA and internationally. Financial products and services include Canadian Personal and Commercial Banking; Wealth Management; U.S. Personal and Commercial Banking; and Wholesale banking products. Its web site is here TD Bank. See my spreadsheet at td.htm.

With part of my money from RIM sale, I have bought some RIOCAN (TSX-REI.UN) stock.

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. See my website for stocks followed and investment notes. Follow me on twitter.

No comments:

Post a Comment