CIBC (TSX:CM) Valuation in Focus as New Debt Offerings and Retirement Products Hit the Market

Canadian Imperial Bank of Commerce (TSX:CM) has been active in the debt markets lately, announcing and completing several fixed-income offerings. At the same time, its asset management arm unveiled new Target Retirement Date Portfolios for Canadian retirement investors.

See our latest analysis for Canadian Imperial Bank of Commerce.

All these moves come as Canadian Imperial Bank of Commerce’s share price has shown impressive momentum, climbing 33.6% year-to-date and boasting a total shareholder return of 38.6% over the past year. Recent milestones such as the flurry of new bond offerings and fresh retirement investment products suggest the market is reassessing the bank’s growth outlook and risk profile favorably, building on the strong multi-year performance.

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But with shares outperforming the broader market and recent product launches making headlines, the question remains: Is Canadian Imperial Bank of Commerce still undervalued, or has the market already accounted for its next leg of growth?

Most Popular Narrative: 7% Overvalued

Canadian Imperial Bank of Commerce’s most popular valuation narrative places its fair value well below the recent closing price, suggesting the market may be getting ahead of itself. A closer look at the thinking behind this assessment reveals what is driving such a view of the bank’s prospects.

"Expansion in the U.S. market, especially in capital markets and commercial banking (with U.S. segment revenue up 32% year-over-year and cross-border referrals above target), is increasing geographic diversification and opening up higher growth potential, supporting future earnings growth."

Read the complete narrative.

Want the full story behind this high valuation? One bold assumption centers on an earnings and revenue growth mix that only a handful of banks can achieve. The most intriguing detail is how future profit multiples and market dynamics are included in the narrative. Curious about the exact metrics supporting this call? Dig into the full narrative for all the underlying financial projections and forecasts.

Result: Fair Value of $112.88 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, sustained gains are not guaranteed. A downturn in Canadian housing or intensified digital competition could quickly challenge the positive outlook.

Find out about the key risks to this Canadian Imperial Bank of Commerce narrative.

Another View: Discounted Cash Flow Model Shows Upside

Looking from another angle, the SWS DCF model suggests Canadian Imperial Bank of Commerce is actually undervalued, with shares trading around 31.6% below its fair value estimate of CA$176.61. This stands in sharp contrast to the narrative that sees the market as overly optimistic. Which valuation would you trust for your next move?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Canadian Imperial Bank of Commerce for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 917 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Canadian Imperial Bank of Commerce Narrative

If you think there’s another angle to this story or want to dive deeper into the data yourself, you can easily put together your own narrative in just a few minutes. Do it your way

A good starting point is our analysis highlighting 4 key rewards investors are optimistic about regarding Canadian Imperial Bank of Commerce.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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