Is it a good company at a reasonable price? The stock price is probably on the expensive side. I think this is a good dividend growth stock as are all the Canadian Banks.
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.
I have three calculations on investing at around $1,000 and what would stock be worth today:
- If you had invested in CIBC in December 1983, $1,003.60 you would have bought 135 Shares. In December 2021, after 37 years you would have received $11,750.70 in dividends. The stock would be worth $21,463.00. Your total return would have been $33,213.70.
- If you had invested in CIBC in December 1988, $1,002.78 you would have bought 81 Shares. In December 2021, after 32 years you would have received $7,101.27 in dividends. The stock would be worth $13,373.10. Your total return would have been $20,474.37.
- If you had invested in CIBC in December 2011, $1033.06 you would have bought 14 shares at $73.79 per share. In December 2021, after 10 years you would have received $672.84 in dividends. The stock would be worth $1,033.06. Your total return would have been $2,912.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.72 | $1,003.60 | $135.00 | 37 | $11,750.70 | $21,463.00 | $33,213.70 |
| $12.38 | $1,002.78 | $81.00 | 32 | $7,101.27 | $13,373.10 | $20,474.37 |
| $73.79 | $1,033.06 | $14.00 | 10 | $672.84 | $1,033.06 | $2,912.98 |
When I was updating my spreadsheet, I noticed that analysts expected the EPS to go up 27% to $10.40, however, the EPS went up 69% to $13.93.
The dividend yields are moderate with dividend growth low. The current yield moderate (2% to 4% ranges) at 4.02%. The 5 year median dividend yield is good (5% to 6% ranges) at 5.00%. The 10 year and historical median dividend yields are moderate at 4.81% and 4.58%. The dividend growth is currently low (below 8%) at 4.22% per year over the past 5 years. The last dividend increase was in 2021 at 10.3%. However, the bank went a fully year with no increases.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 42% with 5 year coverage at 49%. The DPR for Cash Flow per Share is 31% with 5 year coverage at 42%. The DPR for Free Cash Flow is negative for 2021 with5 year coverage at 13%. However, sites disagree on what the FCF is and differences are sometimes large.
Debt Ratios are fine. Because this is a bank, I am looking at Long Term Debt/Covering Assets Ratio, which for 2021 is good at 0.83. Although Liquidity Ratio is not important for banks, I did calculate this to be 7.44. The Debt Ratio (which is the important one) is 1.06. For banks any ratio of 1.04 or higher is fine.
The Total Return per year is shown below for years of 5 to 38 to the end of 2021. 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. | check |
|---|---|---|---|---|---|---|
| 2015 | 5 | 4.22% | 10.61% | 6.12% | 4.49% | 10.61% |
| 2010 | 10 | 5.22% | 11.89% | 7.17% | 4.72% | 11.89% |
| 2005 | 15 | 5.12% | 6.29% | 2.74% | 3.55% | 6.29% |
| 2000 | 20 | 7.25% | 9.10% | 5.07% | 4.04% | 9.10% |
| 1995 | 25 | 8.01% | 10.95% | 6.54% | 4.41% | 10.95% |
| 1990 | 30 | 7.54% | 12.03% | 7.43% | 4.61% | 12.03% |
| 1985 | 35 | 7.04% | 13.02% | 7.95% | 5.07% | 13.02% |
| 1982 | 38 | 6.57% | 13.45% | 8.07% | 5.37% | 13.44% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.41, 9.04 and 10.67. The corresponding 10 year ratios are 8.47, 9.63 and 10.73. The corresponding historical ratios are 7.95, 9.70 and 10.87. The current P/E Ratio is 11.68 based on a stock price of $160.01 and EPS estimate for 2022 of $13.70. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $168.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.75, 0.82 and 0.93. The current P/GP Ratio is 0.95 based on a stock price of $160.01. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.62. The current P/B Ratio is 1.75 based on a stock price of $160.01, Book Value per Share of $91.66 and Book Value of $41,323. The current ratio is 7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I can also the P/B ratio test based on estimate for 2022. I get a 10 year median Price/Book Value per Share Ratio of 1.62. The current P/B Ratio is 1.63 based on a stock price of $160.01, Book Value per Share estimate for 2022 of $98.30 and Book Value of $44,316M. The current ratio is at the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 3.01. The current P/CF Ratio is negative as the cash flow for the last 12 months is negative. However, I can do a test based on Cash Flow less Working Capital. The 10 year median ratio is 9.19. The current P/CF Ratio is 8.62 based on last 12 month cash flow less working capital of 11,700M, Cash Flow per Share of $18.56 and a stock price of $160.01. The current ratio is 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 4.58%. The current dividend yield is 4.02% based on a stock price of $160.01 and dividends of $6.44. The current dividend yield is 12% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 4.81%. The current dividend yield is 4.02% based on a stock price of $160.01 and dividends of $6.44. The current dividend yield is 16% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.64. The current P/S Ratio is 3.36 based on Revenue estimate for 2022 of 21,450M, Revenue per Share of $47.58 and a stock price of $160.01. The current ratio is 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side. The dividend testing is showing the stock price as reasonable and above the median, but the P/S Ratio test is showing the stock price as expensive. Most of the other testing is showing the stock price as reasonable and above the median or expensive.
I look at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the P/S Ratio is quite high. The P/E Ratio is probably a bit high. The dividend yield is probably fine.
In the following chart the capital gains for the 10 years to December 31, 2021 is 7.17% per year. The beginning yield was at 4.67%, and the P/E Ratio and the P/S Ratio were at 10.09 and 2.46. Does this chart change my opinion of the stock price? Not Really. The P/S Ratio is quite high. To bring the current P/S Ratio to the beginning P/S for the last 5 years (2.65), the Revenue would have to increase by 36% and this seems unlikely.
| # Years | Cap Gains | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | 6.12% | 10.24 | 2.65 | 4.73% |
| 10 | 7.17% | 10.09 | 2.46 | 4.67% |
| 15 | 2.74% | 13.23 | 2.60 | 3.15% |
| 20 | 5.07% | 13.48 | 1.76 | 2.95% |
| 25 | 6.54% | 10.01 | 1.67 | 3.05% |
| 30 | 7.43% | 8.73 | 1.29 | 4.27% |
| 35 | 7.95% | 10.18 | 1.18 | 5.76% |
| 35 | 8.07% | 15.60 | 1.19 | 6.96% |
| current | 11.68 | 3.36 | 4.02% |
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $165.43. This implies a total return of 7.41% with 4.02% from dividends and 3.39% from capital gains based on a stock price of $160.01. The 12 month consensus stock price ranges from $176.00 to 148.41. That would be a range for total return from 14.02% to a capital loss of 3.22% based on a current stock price of $160.61.
Analysts on Stock Chase seem to like this bank and think it is a buy. Jitendra Parashar on Motley Fool likes this bank for sustainable passive income. Adam Othman on Motley Fool thinks this bank is undervalued. The bank talks about their fourth quarterly results on Newswire. Simply Wall Street reports on dividends at this bank via Yahoo Finance. They feel that the cash flow is unstable, but I when I look at cash flow without working capital, the cash flow is fine. I have 38 years of data for dividends and they have never missed a dividend. Over that period, dividends were raised 28 times and never cut.
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 Monday, January 24, 2022 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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