3 Top Bank Stocks to Buy Ahead of Earnings

I’m looking to snatch up top bank stocks like Bank of Montreal (TSX:BMO)(NYSE:BMO) as the first round of bank earnings approach.

Ambrose O'Callaghan

Ambrose O'Callaghan graduated with a BA in Political Science from McMaster University. After that, he jumped into the banking world. He worked from the front line to an investment associate role. After that, he found a way to marry his experience and knowledge in the world of banking and finance to his love and passion for writing. Ambrose is a passionate believer in Warren Buffett's value investing model.

Published February 19, 2022 12:30 pm EST

Canadian banks had a banner year in 2021 after a difficult 2020. Banks benefited from improved volumes and a big dip in provisions set aside for credit losses. Now, the top financial institutions in the country are set to face a tough test, as the Bank of Canada (BoC) sets its sights on rate tightening. Today, I want to look at three top bank stocks to target ahead of their first-quarter earnings releases.

Why I’m looking to buy Canada’s “International Bank” ahead of Q1 results

Scotiabank (TSX: BNS)(NYSE: BNS) is sometimes referred to as “The International Bank” due to its significant global reach compared to its competitors. It boasts a significant presence in Latin America, which has been hit hard by the pandemic. Shares of this bank stock are up 1.4% in 2022 as of late-morning trading on February 18. The stock is up 29% from the previous year.

The bank is set to release its first quarter 2022 earnings on March 1, 2022. In 2021, Scotiabank delivered adjusted net income of $10.1 billion, or $7.87 per diluted share — up from $6.96 billion, or $5.36 per diluted share, in the previous year. Coming into 2021, Scotiabank projected that its domestic operations would need to pick up the slack after a rough 2020. Its Canadian Banking segment delivered in 2021, posting net income growth of 60% to $4.17 billion.

Shares of this bank stock last had a favourable price-to-earnings (P/E) ratio of 11. It last paid out a quarterly dividend of $1.00 per share, which represents a 4.3% yield.

Here’s an underrated bank stock to snag today

Back in December 2021, I’d looked at bank stocks that fly under the radar of most investors. Canadian Western Bank (TSX: CWB) is a regional Canadian bank that has also managed to establish a solid presence in the eastern part of the country. Shares of Canadian Western Bank have increased 5.3% so far this year. The bank stock is up 32% from the same period in 2021.

Investors can expect to see the bank’s first-quarter 2022 earnings on February 25. In 2021, Canadian Western delivered total revenue growth of 13% to $1.0 billion. Meanwhile, diluted earnings per common share climbed 30% to $3.73.

This bank stock last had an attractive P/E ratio of 10. It offers a quarterly dividend of $0.30 per share, which represents a 3.1% yield.

One more top bank stock to buy before its earnings release

Bank of Montreal (TSX: BMO)(NYSE: BMO) is the third bank stock I’d look to snatch up before it first-quarter earnings release. Its shares are up 4.2% so far in 2022. BMO stock has shot up 47% in the year-over-year period.

This top bank is set to release its first-quarter fiscal 2022 earnings on March 1. In 2021, BMO delivered adjusted net income growth of 66% to $8.65 billion. Meanwhile, adjusted earnings per share jumped 68% to $12.96. Shares of this bank stock possess a solid P/E ratio of 12. Meanwhile, it offers a quarterly dividend of $1.33 per share, which represents a 3.6% yield.