Analyst Note| Eric Compton, CFA |
Wide-moat rated Toronto Dominion reported decent fiscal first-quarter earnings. Adjusted earnings per share were CAD 1.83, soundly beating consensus. This represented year-over-year EPS growth of 10%, primarily driven by fee income growth of 8% and lower provisioning. Provisioning was back to its lowest level in years. These results align with our view that the Canadian banks will be fine and that better results should be returning in 2021. So far, results have been even better than expected. We are increasing our fair value estimate to CAD 82/USD 65 per share from CAD 79/USD 61. As the pandemic has further played out and we are more confident in vaccine distribution and economic resilience, we are also lowering our uncertainty rating back to medium from high.