Monday, January 27, 2014

National Bank of Canada 2

On my other blog I am today writing about Book Value...continue...

I do not own this stock of National Bank of Canada (TSX-NA, OTC-NTIOF). I thought I should follow one of the smaller Canadian Banks. This seems like a good choice.

When I look at insider trading, I find $14.9M of inside selling and net insider selling of $14.2M. There is insider buying of $0.7M. Not only do insiders have stock options but have three different types of Restricted Share Units. There are bits of insider ownership, but the only one with substantial insider ownership is the CEO with shares worth around 5.7M. Last year outstanding shares were increase by 1.765M shares with a book value of $107M because of stock options.

The 5 year low, median and high median Price/Earnings per Share Ratios were 8.23, 9.25 and 11.30. The current P/E Ratio is 10.11 based on a stock price of 9.60 based on a stock price of $85.11 and 2014 earnings estimate of $8.78. As with a lot of other stocks, the price for this bank has recently declined. Still this stock test suggests that although the price is reasonable is it on the high side. The P/E is above the median P/E ratio.

I get a Graham price of $95.13. The 10 year low, median and high median P/GP Ratios are 0.80, 0.89 and 1.05. The current P/GP Ratio is 0.89. This suggests that the stock price is reasonable.

The 10 year median Price/Book Value per Share ratio is 1.92 and the current one is 1.86. The current P/B Ratio is about 97% of the 10 year median P/B Ratio. This stock test suggests that the stock price is reasonable.

The 5 year median dividend yield is 4.08% and the current dividend yield is 4.32 a value some 6% higher. It is good that the dividend yield is above the 5 year median, but it is close, so this stock test says that the stock price is reasonable. However, the historical average dividend yield is 3.67% a value some 18% lower than the current dividend yield and by this stock test, the stock price is cheap.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The 12 month stock price consensus is $94.10. This implies a total return of 14.89% with 10.56% from capital gains and 4.32% from dividends. This is quite a respectable return.

At North Fork Vue site they talk about RBC Capital beginning coverage of this stock with a sector perform (or Buy) rating. The blogger Dividend Engineering reviewed this stock in the middle of last year. It was rather hard to find items on this bank.

Looking at my stock tests, it would see that the current stock price is cheap to reasonable. See my spreadsheet at an.htm.

This is the second of two parts. The first part was posted on Friday, January 24, 2014 and is available here.

National Bank of Canada provides financial services to consumers, small and medium-sized enterprises, and large corporations & has branches in every province in Canada. It is also represented in the U.S. and Europe through its subsidiaries and alliances. It is also represented in the U.S. and Europe through its subsidiaries and alliances. Its web site is here National Bank.

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 or StockTwits.


  1. blog needs to be updated since written, NA has split 2:1. Thanks !

  2. I do not usually do posts more than once a year because companies do not change in their essentials that much. I could do a separate entry in my other blog. What are you looking for? Did you want the spreadsheet? If so email me at
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