Is it a good company at a reasonable price? This bank has been producing reasonable profits for its shareholders over the long term. If you like this bank, now is the time to buy when it is cheap. It may take awhile to cover, but you cannot beat getting a bank cheap. The stock price is certainly reasonable and maybe even cheap as shown by several stock price tests, including the dividend yield tests.
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, so I started to follow this bank in 2017.
When I was updating my spreadsheet, I noticed that the stock price fell a lot last year and it has not really recovered. The stock price fell 25.7% in 2022 and it is only up by 6.8% to date this year. Stock price was $73.73 in December 2021, $54.77 in December 2022 and it now $58.50. Also note that the stock was split 2 to 1 in May of 2022.
If you had invested in this company in December 2012, for $1,039.61 you would have bought 26 shares at $39.99 per share. In December 2022, after 10 years you would have received $663.00 in dividends. The stock would be worth $1,521.00. Your total return would have been $2,184.00.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $39.99 | $1,039.61 | 26 | 10 | $663.00 | $1,521.00 | $2,184.00 |
If you had invested in this company in December 1988, for $1,078.11 you would have now 162 shares at costing $6.19 per share. In December 2022, after 33 years you would have received $7,634.25 in dividends. The stock would be worth $9,477.00. Your total return would have been $17,111.25.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $6.19 | $1,078.11 | 162 | 33 | $7,634.25 | $9,477.00 | $17,111.25 |
The dividend yields are good with dividend growth low. The current dividend yield is good (5% and 6% ranges) at 5.81%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.66%, 4.66% and 4.59%. The dividend growth is low (below 8% per year) at 5.3% per year over the past 5 years. There was no time period when the growth was higher than 8%. The last dividend increase was in 2022 and it was for 2.4%. However, this bank tends to increase the dividends more than once a year.
The Dividend Payout Ratios (DPR) are fine based on the DPR for AEPS. The DPR for EPS for 2022 is 49% with 5 year coverage at 50%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 47% with 5 year coverage at 48%. The DPR for Cash Flow per Share (CFPS) is 49% with 5 year coverage at 43%. The DPR for Free Cash Flow for 2022 is 14% with 5 year coverage at 12%. There is no consensus on what the FCF is. The important ratio is for AEPS.
Debt Ratios are fine. Since this is a bank, I am looking at Long Term Debt/Covering Assets Ratio and for 2022 it is good at 0.84. I calculate a Liquidity Ratio for 2022 of 5.81, but for banks this is not an important ratio. The Debt Ratio for 2022 is 1.06 and this is fine for banks.
The Total Return per year is shown below for years of 5 to 39 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 5.31% | 2.74% | -2.22% | 4.96% |
| 2012 | 10 | 6.10% | 8.61% | 3.20% | 5.41% |
| 2007 | 15 | 5.12% | 8.06% | 2.98% | 5.08% |
| 2002 | 20 | 7.33% | 10.52% | 4.85% | 5.67% |
| 1997 | 25 | 7.62% | 8.02% | 3.66% | 4.36% |
| 1992 | 30 | 7.97% | 13.70% | 7.26% | 6.44% |
| 1987 | 35 | 7.24% | 11.86% | 6.46% | 5.39% |
| 1983 | 39 | 6.72% | 13.11% | 7.04% | 6.07% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.23, 10.08 and 10.87. The corresponding 10 year ratios are 8.46, 9.98 and 10.82. The corresponding historical ratios are 8.09, 9.72 and 10.96. They are consistent. The current P/E Ratio is 9.08 based on a stock price of $58.50 and EPS estimate for 2023 of $6.44. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.97, 9.45 and 10.47. The corresponding 10 year ratios are 8.19, 9.43 and 10.63. The current P/AEPS Ratio is 8.57 based on a stock price of $58.50 and AEPS estimate for 2023 of $6.83. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $87.53. The 10-year low, median, and high median Price/Graham Price Ratios are 0.69, 0.81 and 0.92. The current P/GP Ratio is 0.67 based on a stock price of $58.50. The current ratio is below the low of the 10 year median ratio. 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 1.56. The current P/B Ratio is 1.17 based on a Book Value of $45,258M, Book Value per Share of $49.86 and stock price of $58.50. The current P/B Ratio is 25% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2023 and it is $54.00. This gives a ratio of 1.08 and book Value of $49, 021M based on a stock price of $58.50. This ratio is 30% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 2.60. The current P/CF Ratio is 2.34 based on last 12 month Cash Flow of $422,715M, Cash Flow per Share of $25.02 and a stock price of $58.50. The current ratio is 10% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, Cash Flow is not considered very important for banks.
I get an historical median dividend yield of 4.59%. The current dividend yield is 5.81% based on dividends of $3.40 and a stock price of $58.50. The current yield is 27% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.66%. The current dividend yield is 5.81% based on dividends of $3.40 and a stock price of $58.50. The current yield is 25% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.76. The current ratio is 2.29 based on Revenue estimate for 2023 of $23,235M, Revenue per Share of $25.60 and a stock price of $58.50. The current ratio is 17% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable and may even be cheap. Both the dividend yield tests are pointing to cheap. The P/S Ratio is showing reasonable, but the ratio is 17% below the 10 year median. Other tests are also pointing to a cheap price.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), Hold (12), Underperform (1), and Sell (1). The current consensus is a Hold, but the recommendations are all over the place. The 12 month stock price consensus is $64.70. This implies a total return of 16.41% with 10.60% from capital gains and 5.81% from dividends based on a stock price of $58.50.
Last year, 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 $82.72. 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 $80.01. What happened was a price change to $58.50 with a total loss of 22.86% with a capital loss of 26.88 and dividends of $4.02. (Prices are changed to account for the 2 for 1 stock split.
This site of Stock Chase gives this stock 5 stars out of 5. Most analysts on this site do not like this bank and think you are better off with other Canadian Banks. It is on the Money Sense list with a B rating. Amy Legate-Wolfe on Motley Fool thinks you should buy this bank as it has fallen the most. Andrew Walker on Motley Fool thinks that this bank is a good buy at its current price and yield. This bank put out a press release via Newswire on their results for 2022. Simply Wall Street via Yahoo Finance reviews this stock and they do not seem to like it much. Simply Wall Street rate this bank with 4 stars out of 5. They list no risk. Their negativity on this stock and the star ratings do not seem to match up.
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 23, 2023 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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