Toronto-Dominion Bank (TSX:TD) has been one of the best-performing large North American banks this year. Up 34% so far, TD is absolutely crushing the markets in 2025. Not only has the stock delivered a considerable capital gain, but it has also paid relatively high dividends, making for a very rewarding medium-term hold.
The question investors need to ask now is, “What’s next for TD?” While the stock has certainly been on an epic run, it now trades at a multiple commensurate with other large North American banks. In other words, it no longer enjoys a large discount to its sector. However, it is still highly profitable, and has growth potential in its investment banking, insurance and Canadian retail segments. There may still be some juice left in this one. In this article, I explore whether or not TD is still a buy.
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Earnings
A logical place to start when evaluating a stock like TD Bank is the company’s most recent earnings release. This can tell us a lot about how the company is performing.
TD Bank’s most recent earnings release was a significant beat, exceeding analyst estimates on revenue, reported earnings and adjusted earnings. Specific metrics included the following:
- $22.9 billion in reported revenue, up 63.5% year over year.
- $15.14 billion in adjusted revenue, up 0.7%.
- $6.27 in reported earnings per share (EPS), up 364%.
- $1.97 in adjusted EPS, down 3.4%.
- A 14.9% common equity tier-one (CET1) ratio, improved from 13.4%.
- A 4.7 leverage ratio.
Overall, it was a pretty good showing. Prior to the beginning of 2025, TD Bank’s new CEO told investors that he didn’t think much growth would be possible for the year. In the second quarter, the bank actually delivered positive revenue growth, as well as positive reported earnings growth. So, TD is beating the expectations that investors have of it.
Long-term performance
On a long-term basis, TD has been doing quite well. Over the last five years, it compounded its revenue, earnings and book value at the following compounded annual growth rates (CAGRs):
- Revenue: 11.4%.
- Earnings: 11%.
- Equity: 7%.
These growth rates were above average for Canadian large banks in the trailing five-year period. And while I can’t say for sure that TD will keep up the growth going forward — U.S. retail will be a drag on performance as long as its assets remain capped — it should at least be able to eke out growth in its investment banking and Canadian retail segments long term.
Valuation
Last but not least, we can look at TD’s valuation multiples in light of what we’ve covered so far.
At the time of this writing, TD traded at pretty typical multiples for large Canadian banks. These included the following:
- 13.3 times adjusted earnings.
- 10.7 times reported earnings.
- 2.9 times sales.
- 1.45 times book value.
These multiples are much lower than those of the TSX, though not especially low by bank standards — investors usually prefer to buy banks at low multiples.
Foolish takeaway
All things considered, I think TD Bank stock is still a safe buy today. It will likely deliver OK returns over the long run. However, it is no longer a real bargain bin opportunity. Much of its future success has been priced in. But if your return goals are modest, then it’s a buy.
