Toronto-Dominion Earnings: Pressure Emerging From Bank’s U.S. Exposure

Wide-moat-rated Toronto-Dominion reported OK fiscal second-quarter earnings. Adjusted earnings per share were CAD 1.94, representing a year-over-year decline of 4% and a sequential decline of 13%. Results continue to be a bit messy, with a number of adjusting items related to the canceled First Horizon acquisition, while the Cowen acquisition was closed during the quarter. With the First Horizon acquisition now canceled, a number of these one-time items should cease, while the Cowen run rate will become more clear as the year progresses. As a reminder, we had felt the First Horizon acquisition was fully priced and assigned no additional value from its completion, so its cancelation does not materially affect our view of Toronto-Dominion’s fair value.