National Bank of Canada (TSX:NA) - Share price, News & Analysis

Q: What is the Fair Price of NA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

NA (CA$91.6) is trading below our estimate of [[fair value]] (CA$200.55)

NA fundamental analysis
Snowflake Score
Valuation	3/6
Future Growth	0/6
Past Performance	5/6
Financial Health	6/6
Dividends	5/6

NA Stock Overview

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally.

Rewards

Trading at 54.3% below our estimate of its fair value

Earnings grew by 32.5% over the past year

Pays a reliable dividend of 4.02%

Risk Analysis

Earnings are forecast to decline by an average of 1% per year for the next 3 years

National Bank of Canada Competitors

Canadian Imperial Bank of Commerce

TSX:CM

CA$59.5b

Bank of Montreal

TSX:BMO

CA$86.8b

Bank of Nova Scotia

TSX:BNS

CA$94.8b

Toronto-Dominion Bank

TSX:TD

CA$152.8b

Price History & Performance

Summary of all time highs, changes and price drops for National Bank of Canada
Historical stock prices
Current Share Price	CA$91.60
52 Week High	CA$106.10
52 Week Low	CA$82.38
Beta	1.12
1 Month Change	5.34%
3 Month Change	3.14%
1 Year Change	-6.56%
3 Year Change	50.16%
5 Year Change	64.54%
Change since IPO	1,365.60%

Recent News & Updates

Jul 26

Do National Bank of Canada's (TSE:NA) Earnings Warrant Your Attention?

The excitement of investing in a company that can reverse its fortunes is a big draw for some speculators, so even...

Jun 03

National Bank of Canada's (TSE:NA) Upcoming Dividend Will Be Larger Than Last Year's

National Bank of Canada ( TSE:NA ) will increase its dividend on the 1st of August to CA$0.92. This takes the annual...

Shareholder Returns

	NA	CA Banks	CA Market
7D	0.7%	0.8%	1.9%
1Y	-6.6%	-3.6%	-1.1%

Return vs Industry: NA underperformed the Canadian Banks industry which returned -4.7% over the past year.

Return vs Market: NA underperformed the Canadian Market which returned -2% over the past year.

Price Volatility

Is NA's price volatile compared to industry and market?
NA volatility
NA Average Weekly Movement	3.4%
Banks Industry Average Movement	3.1%
Market Average Movement	10.8%
10% most volatile stocks in CA Market	19.4%
10% least volatile stocks in CA Market	4.3%

Stable Share Price: NA is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: NA's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1859	28,189	Laurent Ferreira	https://www.nbc.ca

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International.

National Bank of Canada Fundamentals Summary

How do National Bank of Canada's earnings and revenue compare to its market cap?
NA fundamental statistics
Market Cap	CA$30.82b
Earnings (TTM)	CA$3.33b
Revenue (TTM)	CA$9.45b

9.2x

P/E Ratio

1.6x

P/B Ratio

Is NA overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
NA income statement (TTM)
Revenue	CA$9.45b
Cost of Revenue	CA$0
Gross Profit	CA$9.45b
Other Expenses	CA$6.12b
Earnings	CA$3.33b

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

Aug 24, 2022

Earnings per share (EPS)	9.91
Gross Margin	100.00%
Net Profit Margin	35.26%
Debt/Equity Ratio	220.9%

How did NA perform over the long term?

See historical performance and comparison

Dividends

4.0%

Current Dividend Yield

32%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is NA undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

3/6

Valuation Score 3/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for NA?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for NA. This is calculated by dividing NA's market cap by their current preferred multiple.
What is NA's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$30.82b

NA key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	n/a
Enterprise Value/EBITDA	n/a
PEG Ratio	-9x

Price to Earnings Ratio vs Peers

How does NA's PE Ratio compare to its peers?

NA PE Ratio vs Peers

The above table shows the PE ratio for NA vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	9.1x
CM Canadian Imperial Bank of Commerce	9.3x	8.7%	CA$59.5b
BMO Bank of Montreal	7.3x	-6.8%	CA$86.8b
BNS Bank of Nova Scotia	9.4x	2.5%	CA$94.8b
TD Toronto-Dominion Bank	10.4x	2.4%	CA$152.8b
NA National Bank of Canada	9.2x	-1.0%	CA$30.8b

Price-To-Earnings vs Peers: NA is expensive based on its Price-To-Earnings Ratio (9.2x) compared to the peer average (9.1x).

Price to Earnings Ratio vs Industry

How does NA's PE Ratio compare vs other companies in the North American Banks Industry?

Price-To-Earnings vs Industry: NA is expensive based on its Price-To-Earnings Ratio (9.2x) compared to the Canadian Banks industry average (9.2x)

Price to Earnings Ratio vs Fair Ratio

What is NA's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

NA PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	9.2x
Fair PE Ratio	11.9x

Price-To-Earnings vs Fair Ratio: NA is good value based on its Price-To-Earnings Ratio (9.2x) compared to the estimated Fair Price-To-Earnings Ratio (11.9x).

Share Price vs Fair Value

What is the Fair Price of NA when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: NA (CA$91.6) is trading below our estimate of fair value (CA$200.55)

Significantly Below Fair Value: NA is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

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Future Growth

How is National Bank of Canada forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-1.0%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: NA's earnings are forecast to decline over the next 3 years (-1% per year).

Earnings vs Market: NA's earnings are forecast to decline over the next 3 years (-1% per year).

High Growth Earnings: NA's earnings are forecast to decline over the next 3 years.

Revenue vs Market: NA's revenue (4.2% per year) is forecast to grow slower than the Canadian market (6.3% per year).

High Growth Revenue: NA's revenue (4.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: NA's Return on Equity is forecast to be low in 3 years time (17.2%).

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Past Performance

How has National Bank of Canada performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

11.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: NA has high quality earnings.

Growing Profit Margin: NA's current net profit margins (35.3%) are higher than last year (31.1%).

Past Earnings Growth Analysis

Earnings Trend: NA's earnings have grown by 11.8% per year over the past 5 years.

Accelerating Growth: NA's earnings growth over the past year (32.5%) exceeds its 5-year average (11.8% per year).

Earnings vs Industry: NA earnings growth over the past year (32.5%) exceeded the Banks industry 20.1%.

Return on Equity

High ROE: NA's Return on Equity (16.8%) is considered low.

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Financial Health

How is National Bank of Canada's financial position? (This company is analysed differently as a bank or financial institution)

Financial Health Score

6/6

Financial Health Score 6/6

Asset Level
Allowance for Bad Loans
Low Risk Liabilities
Loan Level
Low Risk Deposits
Level of Bad Loans

Financial Position Analysis

Debt to Equity History and Analysis

Balance Sheet

Financial Institutions Analysis

Asset Level: NA's Assets to Equity ratio (18.1x) is moderate.

Allowance for Bad Loans: NA has a sufficient allowance for bad loans (150%).

Low Risk Liabilities: 71% of NA's liabilities are made up of primarily low risk sources of funding.

Loan Level: NA has an appropriate level of Loans to Assets ratio (51%).

Low Risk Deposits: NA's Loans to Deposits ratio (76%) is appropriate.

Level of Bad Loans: NA has an appropriate level of bad loans (0.3%).

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Dividend

What is National Bank of Canada current dividend yield, its reliability and sustainability?

Dividend Score

5/6

Dividend Score 5/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

4.02%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: NA's dividend (4.02%) is higher than the bottom 25% of dividend payers in the Canadian market (1.93%).

High Dividend: NA's dividend (4.02%) is low compared to the top 25% of dividend payers in the Canadian market (5.39%).

Stability and Growth of Payments

Stable Dividend: NA's dividends per share have been stable in the past 10 years.

Growing Dividend: NA's dividend payments have increased over the past 10 years.

Current Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (32%), NA's dividend payments are well covered by earnings.

Future Payout to Shareholders

Future Dividend Coverage: NA's dividends in 3 years are forecast to be well covered by earnings (40.1% payout ratio).

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Management

How experienced are the management team and are they aligned to shareholders interests?

2.5yrs

Average management tenure

CEO

Laurent Ferreira (51 yo)

0.75

Tenure

CA$8,969,311

Compensation

Mr. Laurent Ferreira serves as President and Chief Executive Officer at National Bank of Canada since November 1, 2021. He served as Chief Operating Officer at National Bank of Canada since February 1, 202...

CEO Compensation Analysis

Compensation vs Market: Laurent's total compensation ($USD7.03M) is about average for companies of similar size in the Canadian market ($USD8.23M).

Compensation vs Earnings: Laurent's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: NA's management team is considered experienced (2.5 years average tenure).

Board Members

Experienced Board: NA's board of directors are considered experienced (7.5 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: NA insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/10 00:00
End of Day Share Price	2022/08/10 00:00
Earnings	2022/04/30
Annual Earnings	2021/10/31