Is It Time To Consider Buying Canadian Imperial Bank of Commerce (TSE:CM)?

By
Simply Wall St
Published
August 30, 2019
TSX:CM
Source: Shutterstock

Today we're going to take a look at the well-established Canadian Imperial Bank of Commerce (TSE:CM). The company's stock saw its share price hover around a small range of CA$98.2 to CA$107.21 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Canadian Imperial Bank of Commerce’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

Check out our latest analysis for Canadian Imperial Bank of Commerce

What is Canadian Imperial Bank of Commerce worth?

Good news, investors! Canadian Imperial Bank of Commerce is still a bargain right now. According to my valuation, the intrinsic value for the stock is CA$156.21, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. However, given that Canadian Imperial Bank of Commerce’s share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.

What kind of growth will Canadian Imperial Bank of Commerce generate?

TSX:CM Past and Future Earnings, August 30th 2019
TSX:CM Past and Future Earnings, August 30th 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Though in the case of Canadian Imperial Bank of Commerce, it is expected to deliver a relatively unexciting earnings growth of 4.4%, which doesn’t help build up its investment thesis. Growth doesn’t appear to be a main reason for a buy decision for Canadian Imperial Bank of Commerce, at least in the near term.

What this means for you:

Are you a shareholder? Even though growth is relatively muted, since CM is currently undervalued, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as capital structure to consider, which could explain the current undervaluation.

Are you a potential investor? If you’ve been keeping an eye on CM for a while, now might be the time to make a leap. Its future outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy CM. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed buy.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Canadian Imperial Bank of Commerce. You can find everything you need to know about Canadian Imperial Bank of Commerce in the latest infographic research report. If you are no longer interested in Canadian Imperial Bank of Commerce, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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