Why Is Everyone Talking About TD Stock?

TD Bank (TSX:TD) stock is facing a challenging environment in this economy, but I’m still looking to add shares right now.

| More on:

TD Bank (TSX:TD) is the second largest of the Big Six Canadian banks. It is behind only Royal Bank, as they are the two largest stocks by market cap on the S&P/TSX Composite Index. Today, I want to discuss why Canadians have their eye on TD Bank and some of its peers in the early part of November. Let’s jump in.

How has TD Bank stock performed in the autumn?

Shares of TD Bank have dropped 11% in 2022 as of close on November 4. That has pushed this top stock into negative territory in the year-over-year period. However, its shares have jumped 6.9% over the past month.

TD Bank has managed to regain momentum along with the broader TSX since early October. At that time, North American stocks were broadly reeling. Despite the October bump, there is still considerable anxiety surrounding the market and the broader economic. Canada’s largest financial institutions may be entering an extremely challenging period. The Bank of Canada (BoC) has pushed forward with its most aggressive interest rate-tightening program in decades. That has put immense pressure on the Canada housing market and on Canadian consumers.

Will this top bank stock continue to build on a strong performance in October? That may depend on how investors digest its final batch of earnings.

What should you expect ahead of its next earnings release?

Canada’s second-largest bank is expected to unveil its fourth-quarter and full-year fiscal 2022 earnings on December 1, 2022.

The bank released its third-quarter (Q3) fiscal 2022 results on August 25. In Q3 2022, it posted adjusted net income of $3.81 billion or $2.09 per share — up from $3.62 billion, or $1.96 per diluted share. Canadian Retail delivered net income growth of 6% from the prior year to $2.25 billion. That net income growth was powered by higher banking and insurance volumes, improved profit margins from rising interest rates, record credit card sales, and an increase in customer activity.

TD posted United States Retail banking adjusted net income growth of 13% to $1.46 billion. It posted personal loan and deposit growth of 8%, which fueled overall loan growth of 2.6% in the quarter. Meanwhile, Wholesale Banking net income plunged 18% from the previous year.

Income growth has slowed considerably at TD Bank in this challenging economic climate. Higher interest rates will limit credit growth. However, it will also lead to improved profit margins for all the top Canadian banks.

TD Bank: Is it worth buying today?

Besides being two of the top banks in Canada, TD Bank is also one of the largest retail banks in the United States. That means investors are granted exposure to a dynamic U.S. market. Canadian banks proved very resilient during the Great Recession. That means investors can trust these entities, as uncertainty builds in the present.

TD Bank currently possesses a favourable price-to-earnings ratio of 11. That puts this bank stock in more attractive value territory compared to its industry peers. Moreover, it offers a quarterly dividend of $0.89 per share. That represents a solid 4% yield. I’m looking to snatch up TD Bank stock ahead of its December earnings release.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has positions in TORONTO-DOMINION BANK. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

More on Bank Stocks

ETF stands for Exchange Traded Fund
Bank Stocks

A Canadian Bank ETF I’d Buy With $1,000 and Hold Forever

This unique Hamilton ETF gives you 1.25x leveraged exposure to Canada's Big Six bank stocks.

Read more »

trends graph charts data over time
Bank Stocks

2 Strong Bank Stocks to Consider Before Year-End

Buying these two top Canadian bank stocks before the year-end could help you receive strong returns on your investments in…

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Stocks for Beginners

How to Grow Your TFSA Well Past the Average

Need to catch up quick with your TFSA? Consider some regular contributions to this top bank stock, as well as…

Read more »

Beware of bad investing advice.
Bank Stocks

Shocking Declines: Canadian Stocks That Disappointed Investors in 2024

TD Bank and Telus International are two TSX stocks that are trading below 52-week highs in December 2024.

Read more »

Investor reading the newspaper
Bank Stocks

These Cheap Canadian Bank Stocks Offer 5% Yields

Bank of Nova Scotia (TSX:BNS) and another 5%-yielder are worth banking on for the long run.

Read more »

coins jump into piggy bank
Stocks for Beginners

Is Laurentian Bank Stock a Buy for its 6.5% Dividend Yield?

Laurentian Bank stock may have a stellar dividend yield, but there are several risks involved with taking on this stock…

Read more »

a person looks out a window into a cityscape
Bank Stocks

Should You Buy TD Bank Stock While it’s Below $76?

TD Bank stock dips below $76! With a 5.6% yield and robust growth prospects, is this the buy opportunity contrarian…

Read more »

TD Bank stock
Bank Stocks

TD Bank Stock: Buy, Sell or Hold for 2025?

TD Bank stock slipped after reporting fourth-quarter 2024 earnings.

Read more »