Is it a good company at a reasonable price? This bank has done well for investors since it was started some 21 years ago. Currently, analysts expect another good year for this bank. It is on the Money Sense Dividend list. Since this is a small bank, caution is advised. The dividend yield and P/S Ratio testing is saying that the stock price is currently reasonable. Part of the reason for the dividend yield testing reasonable is that the dividends are growing faster than the stock price.
I do not own this stock of EQB Inc (TSX-EQB, OTC-EQGPF). I had read a glowing report on investing on this company in 2013, so I decided to check it out. It was interesting as it was loaning money to new immigrants, a class of people who generally have a difficult time getting loans and mortgages from our regular banks. It sounded intriguing.
When I was updating my spreadsheet, I noticed that this bank changed its financial year end to October. This is why I am reviewing so soon again after I did a review in October 2024. In the beginning of the year, I have to start with companies with financial year ending in September, October, and November as most companies with December financial year end take at least a month to put out their new financial statements.
The current dividend yield is low with dividend growth good. The current dividend yield is low (below 2%) at 1.87%. The 5, 10 and historical dividend yields are also low at 1.82%, 1.67% and 1.60%. The dividend growth has been good (15% and higher) with grow at 23% per year over the past 5 years. The last dividend increase was in 2024 and it was for 4.3%. However, this bank has been raising the dividends several times during each year.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 17% with 5 year coverage at 13%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 16% with 5 year coverage at 12%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 6%. The DPR for 2024 for Free Cash Flow (FCF) is good at 17% with 5 year coverage at 11%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 17.21% | 13.14% |
| AEPS | 15.78% | 12.44% |
| CFPS | 9.84% | 6.26% |
| FCF | 16.90% | 10.72% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is fine at 12.68 and currently at 11.94. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is good at 0.92 and currently at 0.90 because this is a more important one for a Financial. The Liquidity Ratio for 2024 is good at 3.12 and 2.65 currently. The Debt Ratio for 2024 is fine for a bank at 1.06 and 1.06 currently. The Bank Leverage 5.3% and this is good.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term A | 0.92 | 0.90 |
| Lg Term R | 12.68 | 11.94 |
| Intang/GW | 0.08 | 0.03 |
| Liquidity | 3.12 | 2.65 |
| Liq. + CF | 2.76 | 2.76 |
| Debt Ratio | 1.06 | 1.06 |
| Bk Leverage | 5.3% | 5.3% |
The Total Return per year is shown below for years of 5 to 21 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 23.32% | 14.98% | 13.52% | 1.45% |
| 2014 | 10 | 18.09% | 13.84% | 12.57% | 1.27% |
| 2009 | 15 | 15.51% | 18.52% | 16.87% | 1.64% |
| 2004 | 20 | 10.41% | 14.13% | 12.81% | 1.32% |
| 2003 | 21 | 12.25% | 11.16% | 1.09% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.42, 7.43 and 9.44. The corresponding 10 year ratios are 5.43, 6.74 and 8.98. The corresponding historical ratios are 5.49, 6.93 and 9.19. The current P/E Ratio is 8.85 based on a stock price of $104.97 and EPS estimate for 2025 of $11.86. This ratio is between the median and high ratio 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above 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 5.00, 7.06, 9.28. The corresponding 10 year ratios are 5.09, 6.90 and 8.57. The current P/AEPS Ratio is 8.70 based on a stock price of $104.97 and AEPS for 2025 of $12.07. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $147.11. The 10-year low, median, and high median Price/Graham Price Ratios are 0.40, 0.54 and 0.69. The current P/GP Ratio is 0.71 based on a stock price of $104.97. This ratio is above the high ratio of the 10 year median ratios. 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 0.99. The current P/B Ratio is 1.32 based on a Book Value of $3,128M, Book Value per Share of $81.35 and stock price of $104.97. The current ratio is 33% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2025 of $87.50. This implies a ratio of 1.20 based on a stock price of $104.97 and a Book Value of $3,364M. This ratio is 21% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 3.47. However, the Cash Flow for the last 12 months is negative, so I cannot do any P/CF Ratio testing.
I get an historical median dividend yield of 1.60%. The current dividend yield is 1.87% based on dividends of $1.96 and a stock price of $104.97. The current dividend yield is 11% above the historical median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 1.67%. The current dividend yield is 1.87% based on dividends of $1.96 and a stock price of $104.97. The current dividend yield is 17% above the 10 year median ratio. 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 3.19. The current P/S Ratio is 3.14 based on Revenue estimate for 2025 of $1287M, Revenue per Share of $33.47 and a stock price of $104.97. The current ratio is 2% 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 that the stock price could be reasonable. The dividend yield tests show that the stock price is relatively reasonable. It is confirmed by the P/S Ratio testing. However, I do note that a number of tests are showing the stock price as relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4), Hold (3). The consensus would be a Strong Buy. The 12 month stock price consensus is $123.70 with a high of $153.00 and low of $109.00. The stock price consensus price of $123.70 implies a total return of 19.23% with 17.37% from capital gains and 1.87% from dividends.
There are 3 analysts remarks on Stock Chase for this stock in 2025. All are buys. The company is liked, but its small size is noted. Stock Chase gives this stock 4 stars out of 5. Andrew Button on Motley Fool says this is a small Canadian bank with no US presence and therefore Trump proof. Aditya Raghunath on Motley Foolsays it is a Cheap Canadian stocks that will deliver outsized returns. The company put out a press release via Newswire about its fourth quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. They have one warning of Significant insider selling over the past 3 months.
EQB Inc operates through its wholly owned subsidiary, Equitable Bank, Canada's Challenger Bank. It serves Canadians through two business lines, Personal Banking and Business Banking. The company differentiates by providing a host of challenger bank deposit services, alternative single-family lending, reverse mortgage lending, insurance lending, Specialized finance, Commercial finance group, Equipment financing, credit union services and trust services. Its web site is here EQB Inc.
The last stock I wrote about was about Cogeco Communications Inc (TSX-CCA, OTC-CGEAF) ... learn more. The next stock I will write about will be Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more on Wednesday, February 5, 2025 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks February 2025 learn more on Tuesday, February 4, 2025 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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