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Key Fundamental Statistics for the Big 5 Canadian Banks

By Edited Feb 8, 2016 1 1

This is a summary and ranking of the key fundamental statistics for the Big 5 Canadian banks. In my article The Canadian Financial Industry as an Investment I explain why Canadian banks are a solid investment and should be looked at for a possible investment by all conservative equity investors. Comparing the Big 5 to the banking industry worldwide, you will see below the Canadian banks consistently outperform the industry standard in important metrics such as price to earnings and dividend payouts, particularly against the US banks. The Big 5 are as follows:

Bank Of Montreal NYSE:BMO
Bank Of Nova Scotia NYSE:BNS
Canadian Imperial Bank of Commerce NYSE:CM
Royal Bank Of Canada NYSE:RY
Toronto Dominion Bank NYSE:TD


Price/Earnings

The Price to Earnings metric reflects a company's latest earnings performance in terms of its stock price. The lower the ratio, the more undervalued the company. A P/E of 15 or less is generally seen as acceptable for a mature industry such as The banking industry. While the industry metric of 28.0 is well above that, all 5 Canadian banks fit within the 15 or less requirement, making all 5 of them buys at current prices using the P/E.

CM...............12.5
BMO............13.9
RY...............14.0
BNS.............14.3
TD...............15.0
Industry...28.0


Price/Sales

The Price to Sales metric reflects a company's latest revenue in terms of its stock price. The industry metric is 2.3, but all 5 banks have a higher price to sales metric. The strong margins, clean blaance sheets and stable revenues relative to other banks worldwide alow the Canadian banks to have a higher Price to Sales metric as they can maintain high earnings and dividend payouts despite a smaller top line revenue figure.

Industry...2.3
CM...............2.6
RY...............2.6
BMO............2.8
TD...............3.4
BNS.............3.6


Price/Book

The Price to Book metric values a company's equity on its balance sheet in terms of its price. The metric is useful but can be deceiving as asset values on the balance sheet reflect their cost rather than market value. Given the trouble with valuing certain distressed assets on the balance sheet, this method could be quite skewed. Canadian banks have derivatives and bad mortgages as a much smaller percentage of their total holdings than US and other countries' banks, so investors reward this prudent approach to banking with a high P/B metric. The Big 5 are very unlikely to go through any type of liquidation given their strong financial position and importance to the Canadian economy, thus a P/B of well over 1 does not have great relevance as income keeps on coming.

Industry...1.3
BMO............1.6
TD...............1.7
RY..............2.3
BNS............2.5
CM.............2.5


Profit Margin

Profit Margin shows a company's operational earnings in terms of revenue. All 5 banks have a margin that is superior vs the banking industry worldwide.

BNS..............27.15%
TD................22.72%
CM...............22.42%
BMO............22.27%
RY...............19.47%
Industry...15.02%


Dividend %

Dividend % is the amount of a company's yearly dividend payout in terms of its price. Many investors are interested in the banking industry because of its history of paying out good and consistent dividends. The Canadian banking industry is of particular interest to those who like high dividend payouts as all 5 sit well above the industry average in the 3-5% range. There are also other great resources for finding high-paying dividend stocks available on the web.

BMO.............4.63%
CM...............4.37%
BNS.............3.64%
RY...............3.60%
TD...............3.26%
Industry...2.56%


Disclaimer: The source of the information was taken from TD Waterhouse Market Research services and Yahoo Finance as of November 28, 2010. I do not own any positions in any of the stocks mentioned in this article.

My investment blog

Refer to my other investment articles if you are interested in learning about:

Junior Gold Explorers

Biotech Stocks and Beaten Down Biotech Stocks

Natural Gas

Penny Stocks

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Comments

Nov 29, 2010 8:50am
Deborah-Diane
Very interesting information. Thank you for presenting it in such clear terms.
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