National Bank of Canada (TSX:NA), one of Canada’s largest financial institutions, announced better-than-expected third-quarter earnings results on the morning of August 26, and its stock responded by rising over 5% in the day’s trading session. The company’s stock still sits more than 21% below its 52-week high of $55.50 reached back in November 2014, so let’s take a closer look at the results to determine if this could the start of a sustained rally higher and if we should consider initiating positions today.

Surpassing analysts’ expectations with ease

Here’s a summary of National Bank’s third-quarter earnings results compared with what analysts had expected and its results in the same period a year ago.

Metric Reported Expected Year-Ago
Adjusted Earnings Per Share $1.25 $1.19 $1.20
Adjusted Revenue $1.55 billion $1.48 billion $1.48 billion

Source: Financial Times

National Bank’s adjusted earnings per share increased 4.2% and its adjusted revenue increased 4.6% compared with the third quarter of fiscal 2014. The company’s strong earnings-per-share growth can be attributed to its adjusted net income increasing 4% to $444 million, driven by growth in all three of its major segments, including 8% growth to $202 million in its financial markets segment, 5.9% growth to $197 million in its personal and commercial banking segment, and 10.5% growth to $84 million in its wealth management segment.

Its strong revenue growth can be attributed to its non-interest income increasing 5.6% to $826 million, driven by 5.3% growth to $277 million in its personal and commercial banking segment and 3.6% growth to $268 million in its wealth management segment.

Here’s a quick breakdown of eight other notable statistics from the report compared with the year-ago period:

  1. Net interest income increased 3.6% to $727 million
  2. Total assets increased 8.4% to $215.56 billion
  3. Total deposits increased 11% to $127.61 billion
  4. Total loans and acceptances increased 9.1% to $112.79 billion
  5. Total assets of under administration increased 4.3% to $314.93 billion
  6. Total assets under management increased 19.8% to $50.39 billion
  7. Total equity increased 9.5% to $10.92 billion
  8. Book value per share increased 9.6% to $27.60

National Bank also announced that it will be maintaining its quarterly dividend of $0.52 per share, and the next payment will come on November 1 to shareholders of record at the close of business on September 28.

Should you buy National Bank today?

It was a fantastic quarter overall for National Bank of Canada, and the results surpassed analysts’ expectations, so I think its stock responded correctly by rallying over 5%. I also think this could be the start of a sustained rally back towards its 52-week high, because the stock still trades at inexpensive valuations and has a high dividend yield with a track record of increasing its annual payment.

First, National Bank’s stock trades at just 9.4 times fiscal 2015’s estimated earnings per share of $4.67 and only 8.9 times fiscal 2016’s estimated earnings per share of $4.90, both of which are inexpensive compared with its five-year average price-to-earnings multiple of 10.2 the industry average multiple of 11.9. It also trades at a mere 1.59 times its book value per share of $27.60, which is a major discount compared with its market-to-book value of 1.94 at the end of the year-ago period.

Second, National Bank pays an annual dividend of $2.08 per share, giving its stock a 4.75% yield at today’s levels. The company has also increased its dividend for five consecutive years, making it both a high dividend and dividend-growth play, and this will continue to attract income investors and those looking to minimize risk in today’s volatile times.

With all of the information provided above in mind, I think National Bank of Canada represents one of the best long-term investment opportunities in the banking industry today. All Foolish investors should take a closer look and strongly consider beginning to scale in to positions.

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Fool contributor Joseph Solitro has no position in any stocks mentioned.