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The Toronto-Dominion Bank TD

Morningstar Rating
CAD 75.58 −1.23 (1.60%)
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Company Report

Toronto-Dominion Earnings: Loss Provisioning and Restructuring Expenses Eat Away at Decent Results

Wide-moat-rated Toronto-Dominion Bank reported solid underlying second-quarter results that were marred by a variety of restructuring- and acquisition-related expenses, as well as a CAD 615 million provision for potential losses as the bank's anti-money laundering, or AML, practices are investigated by regulators. Revenue increased 11% from last year and 1% from last quarter to CAD 13.8 billion. Meanwhile, diluted earnings per share decreased 20% to CAD 1.35. However, adjusted for the AML provision as well as other restructuring and acquisition expenses, adjusted earnings per share increased 7% to CAD 2.04. As we incorporate these results, we are reducing our fair value estimate for Toronto-Dominion bank to CAD 90/USD 66 from CAD 92/USD 69 as we incorporate higher losses and more ongoing compliance expenses into our model. Even with the decrease, we still see the shares as undervalued at the current price.

Price vs Fair Value

TD is trading at a 16% premium.
Price
CAD 76.81
Fair Value
CAD 58.00
Uncertainty
Low
1-Star Price
CAD 831.00
5-Star Price
CAD 58.40
Economic Moat
Zccp
Capital Allocation
Mxpnygggc

Bulls Say, Bears Say

Bulls

The profitability of its Canadian bank segment should continue for some time, providing a solid foundation for strong returns for Toronto-Dominion.

Bears

The bank's higher US exposure and higher rate sensitivity is turning into a double-edged sword, as higher rates are now putting more pressure on earnings, particularly within the US

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News

Trading Information

Previous Close Price
CAD 76.81
Day Range
CAD 74.9977.95
52-Week Range
CAD 73.9887.10
Bid/Ask
CAD 75.50 / CAD 75.60
Market Cap
CAD 133.64 Bil
Volume/Avg
6.6 Mil / 7.8 Mil

Key Statistics

Price/Earnings (Normalized)
9.90
Price/Sales
2.60
Dividend Yield (Trailing)
5.10%
Dividend Yield (Forward)
5.26%
Total Yield
9.50%

Company Profile

Toronto-Dominion is one of Canada's two largest banks and operates three business segments: Canadian retail banking, U.S. retail banking, and wholesale banking. The bank’s U.S. operations span from Maine to Florida, with a strong presence in the Northeast. It also has a 13% ownership stake in Charles Schwab.
Sector
Financial Services
Industry
Banks - Diversified
Stock Style Box
Large Value
Total Number of Employees
103,257

Competitors

Valuation

Metric
TD
CM
BMO
Price/Earnings (Normalized)
9.909.8911.67
Price/Book Value
1.341.241.33
Price/Sales
2.602.562.88
Price/Cash Flow
9.075.499.72
Price/Earnings
TD
CM
BMO

Financial Strength

Metric
TD
CM
BMO
Quick Ratio
Current Ratio
Interest Coverage
Quick Ratio
No chart available

Profitability

Metric
TD
CM
BMO
Return on Assets (Normalized)
0.75%0.69%0.65%
Return on Equity (Normalized)
14.20%13.91%11.72%
Return on Invested Capital (Normalized)
Return on Assets
TD
CM
BMO
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Banks - Diversified Industry Comparables

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Name
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
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BAC
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HSBC
HSBC Holdings PLC ADRQqrsdyxnRsktd$166.1 Bil
RY
Royal Bank of CanadaYdfqkpxqrqSqhkr$150.3 Bil
C
Citigroup IncGgstthlcYnv$123.5 Bil
MUFG
Mitsubishi UFJ Financial Group Inc ADRPxcjdgwnRxzc$116.6 Bil
TD
The Toronto-Dominion BankNfwywpqzxKzfkj$100.7 Bil
UBS
UBS Group AGSytjnrxhbPqyrgcm$97.4 Bil
SAN
Banco Santander SA ADRYzvplTkzlcz$81.3 Bil

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