I do not own this stock of Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM). This was the only major Canadian Bank I was not following. I think it is about time I did.
When I was updating my spreadsheet, I noticed I also showed what you would have if you invested $1,000 32 years ago in December 1988. Today, the shares would be worth $9,182.26 and you would have received $6,610.23 in dividends.
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 5.19%. The 5 year median dividend yield is also good at 5.06%. The 10 and historical median dividend yields are moderate (2% to 4% ranges) at 4.81% and $4.42%.
The Dividend Payout Ratios (DPR) are a little too high. The DPR for EPS for 2020 is 71% with 5 year coverage at 50%. The DPR for CFPS is 63% with 5 year coverage at 47%. The DPR for Free Cash Flow could be 4.29% with 5 year coverage at 10%, but sites do not come close to agreeing on the FCF.
Debt Ratios are fine. Because this is a bank, I am looking at Long Term Debt/Covering Assets Ratio which for 2020 is 0.82 and is fine. The Liquidity Ratio does not matter for banks. The Debt Ratio for 2020 is 1.06 and anything at 1.04 or higher is fine for banks.
The Total Return per year is shown below for years of 5 to 33 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 6.39% | 8.99% | 3.58% | 5.41% |
| 2010 | 10 | 5.28% | 8.26% | 3.33% | 4.92% |
| 2005 | 15 | 5.36% | 6.80% | 2.38% | 4.43% |
| 2000 | 20 | 7.82% | 9.03% | 4.34% | 4.69% |
| 1995 | 25 | 8.60% | 12.70% | 6.94% | 5.76% |
| 1990 | 30 | 7.53% | 12.82% | 7.25% | 5.57% |
| 1987 | 33 | 7.29% | 11.99% | 6.84% | 5.14% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.79, 9.04 and 10.66. The corresponding 10 year ratios are 8.86, 9.98 and 10.73. The corresponding historical ratios are 8.23, 9.76 and 14.02. The current P/E Ratio is 10.83 based on a stock price of $112.61 and an EPS estimate for 2021 of $10.40. This stock price testing suggests that the stock price is relatively reasonable but above the median.
If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, 25, and 30 year periods, I find the following. For example, total return over the past 15 years is 6.80% per year, the starting P/E Ratio (the one from 15 years ago) was -166.11. (CIBC had a big Earnings loss that year). From the point of view of this chart, a P/E Ratio of 10.83. would be a little high, but at least from that level return was over 8%.
| Year | Tot Return | Start P/E |
|---|---|---|
| 5 | 8.99% | 10.28 |
| 10 | 8.26% | 13.34 |
| 15 | 6.80% | -166.11 |
| 20 | 9.03% | 9.61 |
| 25 | 12.70% | 9.72 |
| 30 | 12.82% | 6.59 |
I get a Graham Price of $139.92. The 10 year low, median, and high median Price/Graham Price Ratios are 0.82, 0.87 and 0.95. The current P/GP Ratio is 0.80 based on a stock price of $112.61. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.77. The current P/B Ratio is 1.35 based on a stock price of $112.61, Book Value of $37,579 and Book Value per Share of $83.67. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.42%. The current dividend yield is 5.19% based on a stock price of $112.61 and dividends of $5.84. The current yield is 17% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.81%. The current dividend yield is 5.19% based on a stock price of $112.61 and dividends of $5.84. The current yield is 8% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.52. The current P/S Ratio is 2.66 based on Revenue estimate for 2021 of $19,020M, Revenue per Share of $42.35 and a stock price of $112.61. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield test shows cheap and reasonable and below the median. The P/S Ratio test shows that the stock is reasonable but above the median. The P/B Ratio test is good and it shows the stock price as cheap.
Is it a good company at a reasonable price? I think that the stock price is currently reasonable. This is a dividend growth stock and therefore a kind I like. I think that Canadian Investor should have at least one, if not two Canadian banks in their portfolios.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), Hold (6), and Underperform (1). They are all over the place in recommendations. The consensus would be a Buy. The 12 month stock price consensus is $120.11. This implies a total return of 11.85% with 6.66% from capital gains and 5.19% from dividends.
The latest comment from an analyst is that this stock is a Top Pick on Stock Chase. Stock Chase also gives this stock 5 stars out of 5. Demetris Afxentiou on Motley Fool names four diversified income stocks to buy and this stock is included in his list. The Executive Summary on Simply Wall Street gives this bank 4 stars out of 5 and list no risks. A writer on Simply Wall Street talks about who owns shares in this company. Sean Solo on YouTube talks about 5 Canadian Banks.
Canadian Imperial Bank of Commerce is Canada's fifth- largest bank, operating three business segments: retail and business banking, wealth management, and capital markets. It serves approximately 11 million personal banking and business customers, primarily in Canada. Its web site is here Canadian Imperial Bank of Commerce.
The last stock I wrote about was about was National Bank of Canada (TSX-NA, OTC-NTIOF) ... learn more. The next stock I will write about will be Transcontinental Inc (TSX-TCL.A, OTC-TCLAF) ... learn more on Friday, January 22, 2021 around 5 pm. Tomorrow on my other blog I will write about Financial to Buy.... learn more on Thursday, January 21, 2021 around 5 pm.
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Thanks for sharing such an informative post.
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