CIBC Just Posted Record Revenue. So Why Does the Stock Still Look Cheap?

Canadian banks rarely look cheap. They are well-run, well-capitalised, and widely covered by financial analysts, so the market tends to price in their quality fairly efficiently.

That’s what makes it interesting when one of the Big Six posts record revenue and a 20%+ return on equity in a single quarter, yet still trades at a valuation that looks modest relative to its own history. It doesn’t happen often, and when it does, it tends to be worth a second look. For dividend investors looking to own a major Canadian bank at a good price, CIBC is the choice that stands out right now.

CIBC

Canadian Imperial Bank of Commerce (TSX:CM) is Canada’s fifth-largest bank, making money the old-fashioned way through Canadian personal banking, commercial banking, wealth management, and capital markets, with a meaningful U.S. business as well. Over the last year, the dividend stock has felt a bit like the quiet kid in the corner while investors obsessed over flashier themes. That is exactly why it can start to look tempting when it trades at a more modest multiple, even though the underlying franchise still prints profit in multiple lines of business.

A big driver behind recent growth was capital markets strength, showing CIBC can benefit when trading, deal-making, and underwriting heat up. Net income in its capital markets business surged 42% to $877 million, helped by robust activity and strength in metals and mining. That is not the only engine in the bank, but it is a nice one to have when the broader economy feels uncertain.

Into earnings

CIBC just posted a very strong first quarter for fiscal 2026, and it did it with record revenue across all of its business units. Revenue climbed to $8.4 billion versus $7.28 billion a year earlier, while reported net income rose to $3.1 billion and adjusted net income increased to $2.69 billion. Adjusted diluted earnings per share (EPS) came in at $2.76, up from $2.20 a year earlier. Furthermore, CIBC’s most recent quarter showed stronger profitability and a higher return profile, with reported return on equity (ROE) of 20.2% and adjusted ROE of 17.4%, alongside a common equity tier 1 capital ratio of 13.4%.

It’s also worth calling out what boosted the headline profit, because you do not want to buy a bank based on a one-time sugar rush. CIBC flagged items of note that added a positive $0.45 per share, mainly tied to income tax recoveries. That means the cleaner way to read the quarter is through the adjusted numbers, which still looked strong and showed real operating momentum.

If you want another practical valuation lens, CIBC’s fiscal 2025 materials show its market value to book value ratio around 1.53 at year-end, down from 1.86 the year before. That kind of compression is exactly what people mean when they say a bank looks “discounted,” as it tells you the market is paying less for each dollar of book value than it used to. The forward outlook comes down to whether CIBC can keep growing revenue without letting credit losses and expenses run away, and whether rate cuts eventually change the tone around net interest margins. The risk is straightforward: if the economy weakens more than expected, provisions can rise quickly, and banks rarely look “underrated” in a recession.

Bottom line

CIBC looks interesting today because of its record earnings, a still-healthy capital position, and a valuation that has compressed even as the business improved.

The dividend does not need perfection to work if earnings stay resilient and credit remains contained. If you want a big, boring Canadian bank that can surprise you by simply executing, this one deserves a fresh look today.