Is CIBC (TSX:CM) Overvalued After a Recent Rally? A Fresh Look at the Bank’s Valuation

Canadian Imperial Bank of Commerce (TSX:CM) shares have seen a steady uptick over the past month, rising 7%. Investors are likely watching closely to spot what might be driving the gains and to assess how sustainable the momentum may be.

See our latest analysis for Canadian Imperial Bank of Commerce.

The recent share price rally for Canadian Imperial Bank of Commerce stands out, especially given its impressive three- and five-year total shareholder returns of 118% and 177%, respectively. Momentum appears to be building, with investors seemingly warming to its growth prospects and recalibrating their risk outlook.

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With shares rallying and solid long-term returns, the question now is whether Canadian Imperial Bank of Commerce is trading at a bargain or if the market has already accounted for its future growth prospects. Could there still be a buying opportunity?

Most Popular Narrative: 9.1% Overvalued

Canadian Imperial Bank of Commerce’s widely followed narrative points to a fair value below its most recent close, suggesting the shares may be pricing in a bit more than the fundamentals alone imply. Momentum has been strong, so it’s important to examine what’s behind the narrative’s conclusion.

The bank's targeted investments and deepening relationships in advisory and wealth solutions, such as growth in the Mass Affluent segment and expansion of Imperial Service, are capturing increasing intergenerational wealth transfer, likely to boost fee-based revenue and diversify earnings.

Read the complete narrative.

What’s the narrative’s secret formula for this punchy valuation? It hinges on a mix of improving efficiency, future earnings projections, and elevated profit margins. Yet the real twist is the growth assumptions hidden behind these headline figures. Discover the drivers and see why this price target is stirring debate.

Result: Fair Value of $110.01 (OVERVALUED)

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

However, rising mortgage delinquencies and regulatory cost pressures could challenge the optimistic outlook if the economic or housing environment weakens further.

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

Another View: The SWS DCF Model Finds Hidden Value

Looking at Canadian Imperial Bank of Commerce from the SWS DCF model perspective, the results paint a very different story. According to this approach, the shares are trading well below their estimated fair value. This suggests the market may be underestimating their future cash flows. With both methods telling such different stories, which one do you trust?

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 904 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 believe there’s more to the story or would rather dig into the numbers yourself, you can build your own perspective in just minutes with 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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