While the broader markets are trading near all-time highs, several top TSX stocks are trading at a lower multiple in May 2025. EQB (TSX:EQB) is one such Canadian bank stock that is down almost 16% from all-time highs, allowing you to buy the dip and benefit from outsized gains when sentiment improves.
Valued at a market cap of $3.6 billion, EQB stock has returned 200% to shareholders in the last decade. After adjusting for dividend reinvestments, cumulative returns are closer to 252%. Let’s see why I’m bullish on this Canadian bank stock right now.
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Is this TSX bank stock a good buy?
EQB provides personal and commercial banking services across Canada, including term deposits, high-interest savings accounts, residential and reverse mortgages, home equity lines of credit, equipment financing, and specialized commercial solutions. The Toronto-based company also offers digital banking services to retail and commercial customers.
During the bank’s annual shareholder meeting, CEO Andrew Moor highlighted EQB’s transformation from a regional trust company into Canada’s seventh-largest bank, serving 718,000 customers with 1,900 employees across the country.
EQB delivered a record financial performance in fiscal 2024 (ended in October) and the first quarter (Q1) of 2025, maintaining a return on equity at or above 15% while increasing dividend payouts. Its focus on domestic markets distinguishes EQB from competitors pursuing international expansion. This strategy allows concentrated investment in Canadian markets and customers.
The bank’s digital platform, EQB, continues gaining recognition as a Forbes-listed world’s best bank, driven by customer feedback. Recent innovations include enhanced Canadian-to-U.S. dollar exchange rates, expanded Quebec services through Banque EQ, and a new small business account offering. With over 500,000 everyday account holders, including growing payroll deposit customers, EQB is positioning for deeper customer relationships.
Today, EQB stands uniquely positioned as the largest bank beyond traditional Big Six institutions. Management advocates for regulatory modernization, including increased Canada Deposit Insurance Corporation insurance limits, streamlined internal ratings-based systems access, and long-awaited open banking implementation.
A strong performance in Q1 of 2025
EQB delivered solid Q1 results, with earnings per share of $2.98, up 19% sequentially and 8% year over year. The Canadian challenger bank achieved a 15.2% return on equity that aligns with management’s targets.
In fiscal Q1, EQB’s provision for credit losses (PCLs) declined to $13.7 million from $31.9 million in Q4, indicating an annualized rate of just 12 basis points. Moreover, PCLs for the equipment financing vertical dropped from $16 million to $8 million quarterly.
Mortgage originations surged, with uninsured single-family volumes up 23% year over year, while EQB’s customer base grew 26% to 536,000 clients. The digital platform continues gaining traction with increasing payroll deposits, indicating deeper customer relationships.
CFO Chadwick Westlake announced his departure to join OpenText, with VP David Wilkes and Treasurer Tim Charron expanding responsibilities during the transition. EQB maintains strong capital ratios above 15% total capital while targeting continued dividend growth of 15% annually.
What is the target price for EQB stock?
Analysts tracking the TSX stock expect adjusted earnings per share to increase from $11.03 in fiscal 2024 to $13.18 in fiscal 2026. Comparatively, adjusted earnings per share are forecast to expand from $1.74 to $2.39 in this period.
If the TSX dividend stock is priced at 12 times forward earnings, it should trade around $156 in May 2026, indicating an upside potential of almost 60% from current levels.
Given consensus price targets, analysts remain bullish and expect EQB stock to gain 25% over the next 12 months.
