Canadian Imperial Bank of Commerce (TSX:CM)(NYSE:CM), Canada’s fifth-largest bank, released its fourth-quarter earnings results this morning, and its stock has responded by rising over 2% in early trading. Let’s break down the results and the fundamentals of its stock to determine if we should be long-term buyers today.
Breaking down the quarterly results
Here’s a quick breakdown of 10 of the most notable financial statistics from CIBC’s three-month period ended October 31, 2017, compared with the same period in 2016:
|Metric||Q4 2017||Q4 2016||Change|
|Net interest income||$2,464 million||$2,110 million||16.8%|
|Non-interest income||$1,805 million||$1,571 million||14.9%|
|Total revenue||$4,269 million||$3,681 million||16.0%|
|Adjusted net income||$1,164 million||$931 million||25.0%|
|Adjusted diluted earnings per share (EPS)||$2.81||$2.60||8.1%|
|Total assets||$565,264 million||$501,357 million||12.7%|
|Deposits||$439,706 million||$395,647 million||11.1%|
|Loans and acceptances, net of allowance||$365,558 million||$319,781 million||14.3%|
|Common shareholders’ equity||$29,238 million||$22,472 million||30.1%|
|Book value per share||$66.55||$56.59||17.6%|
What should you do now?
It was a fantastic quarter overall for CIBC, and it posted phenomenal results for the full year of fiscal 2017, with its revenue up 8.3% to $16.28 billion and its adjusted diluted EPS up 8.7% to $11.11 compared with fiscal 2016. With these strong results in mind, I think the market has responded correctly by sending its stock higher, and I think it still represents a great long-term investment opportunity for two fundamental reasons.
First, it’s still undervalued. CIBC’s stock still trades at just 10.5 times fiscal 2017’s adjusted EPS of $11.11, which is inexpensive compared with its five-year average multiple of 10.8; this multiple is also very inexpensive given its current earnings-growth rate, its estimated 4.1% long-term earnings-growth rate, and the strength and stability of its business model.
Second, it’s a dividend-growth superstar. CIBC pays a quarterly dividend of $1.30 per share, representing $5.20 per share annually, giving it a beautiful 4.4% yield. The company has also raised its annual dividend payment for seven consecutive years, and its 2.4% hike in August has it on track for fiscal 2018 to mark the eighth consecutive year with an increase.
CIBC’s stock is up over 9% since I recommended it following its third-quarter earnings release on August 24, and I think it is still a strong buy today, so take a closer look and strongly consider making it a long-term core holding.