TSX:NA

Stock Analysis Report

National Bank of Canada

Executive Summary

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

Rewards

Trading at 23.1% below its fair value

Earnings are forecast to grow 3.74% per year

Earnings grew by 4.9% over the past year

Pays a high and reliable dividend of 3.93%

Risk Analysis

No risks detected for NA from our risk checks.


Snowflake Analysis

Excellent balance sheet established dividend payer.


Similar Companies

Share Price & News

How has National Bank of Canada's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: NA has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

0.5%

NA

0.06%

CA Banks

0.1%

CA Market


1 Year Return

23.7%

NA

8.3%

CA Banks

12.1%

CA Market

Return vs Industry: NA exceeded the Canadian Banks industry which returned 8.3% over the past year.

Return vs Market: NA exceeded the Canadian Market which returned 12.1% over the past year.


Shareholder returns

NAIndustryMarket
7 Day0.5%0.06%0.1%
30 Day4.1%-2.3%0.2%
90 Day11.9%0.4%0.7%
1 Year29.2%23.7%13.0%8.3%15.9%12.1%
3 Year47.0%30.0%21.5%7.8%16.0%5.4%
5 Year86.6%50.3%55.6%27.0%33.5%13.8%

Price Volatility Vs. Market

How volatile is National Bank of Canada's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is National Bank of Canada undervalued compared to its fair value and its price relative to the market?

23.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: NA (CA$72.2) is trading below our estimate of fair value (CA$93.83)

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


Price To Earnings Ratio

PE vs Industry: NA is good value based on its PE Ratio (11.3x) compared to the Banks industry average (11.3x).

PE vs Market: NA is good value based on its PE Ratio (11.3x) compared to the Canadian market (15.2x).


Price to Earnings Growth Ratio

PEG Ratio: NA is poor value based on its PEG Ratio (3x)


Price to Book Ratio

PB vs Industry: NA is overvalued based on its PB Ratio (2x) compared to the CA Banks industry average (1.4x).


Next Steps

Future Growth

How is National Bank of Canada forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

3.7%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: NA's forecast earnings growth (3.7% per year) is above the savings rate (1.4%).

Earnings vs Market: NA's earnings (3.7% per year) are forecast to grow slower than the Canadian market (10% per year).

High Growth Earnings: NA's earnings are forecast to grow, but not significantly.

Revenue vs Market: NA's revenue (7.3% per year) is forecast to grow faster than the Canadian market (5% per year).

High Growth Revenue: NA's revenue (7.3% 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 (16.7%).


Next Steps

Past Performance

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

11.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: NA has high quality earnings.

Growing Profit Margin: NA's current net profit margins (30.2%) are higher than last year (29.8%).


Past Earnings Growth Analysis

Earnings Trend: NA's earnings have grown by 11.1% per year over the past 5 years.

Accelerating Growth: NA's earnings growth over the past year (4.9%) is below its 5-year average (11.1% per year).

Earnings vs Industry: NA earnings growth over the past year (4.9%) exceeded the Banks industry 3.9%.


Return on Equity

High ROE: NA's Return on Equity (15.3%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

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


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: NA has a low level of unsold assets or inventory.

Debt Coverage by Assets: NA's debt is covered by short term assets (assets are 3.9x debt).


Financial Institutions Analysis

Asset Level: NA's level of assets compared to its equity is moderate.

Allowance for Bad Loans: NA has a low allowance for bad loans.

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

Loan Level: NA has an acceptable proportion of non-loan assets held.

Low Risk Deposits: NA's loans are broadly funded by customer deposits.

Level of Bad Loans: NA has an appropriate level of bad loans (0.46%)


Next Steps

Dividend

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

3.93%

Current Dividend Yield


Dividend Yield vs Market

company3.9%marketbottom25%2.0%markettop25%5.7%industryaverage4.3%forecastin3Years4.2%

Current dividend yield vs market & industry

Notable Dividend: NA's dividend (3.93%) is higher than the bottom 25% of dividend payers in the Canadian market (2%).

High Dividend: NA's dividend (3.93%) is low compared to the top 25% of dividend payers in the Canadian market (5.65%).


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

Dividend Coverage: With its reasonably low payout ratio (41.7%), 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 (45.7% payout ratio).


Next Steps

Management

What is the CEO of National Bank of Canada's salary, the management and board of directors tenure and is there insider trading?

5.9yrs

Average management tenure


CEO

Louis Vachon (56yo)

12.5yrs

Tenure

CA$8,870,286

Compensation

Mr. Louis Vachon, CFA, has been Chief Executive Officer and President at National Bank of Canada since June 01, 2007 and served as its Chief Operating Officer from August 01, 2006 to June 01, 2007. Mr. Vac ...


CEO Compensation Analysis

Compensation vs Market: Louis's total compensation ($USD6.72M) is about average for companies of similar size in the Canadian market ($USD7.14M).

Compensation vs Earnings: Louis's compensation has been consistent with company performance over the past year.


Management Age and Tenure

5.9yrs

Average Tenure

Experienced Management: NA's management team is seasoned and experienced (5.9 years average tenure).


Board Age and Tenure

7.2yrs

Average Tenure

61.5yo

Average Age

Experienced Board: NA's board of directors are considered experienced (7.2 years average tenure).


Insider Trading

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


Recent Insider Transactions

BuyCA$12,48519 Nov 19
Raymond Bachand
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares179
Max PriceCA$69.75
BuyCA$33,91022 Aug 19
Raymond Bachand
EntityIndividual
Role
Member of the Board of Directors
Independent Director
Shares548
Max PriceCA$62.40

Ownership Breakdown

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


Management Team

  • Louis Vachon (56yo)

    President

    • Tenure: 12.5yrs
    • Compensation: CA$8.87m
  • Ghislain Parent

    CFO & Executive VP of Finance

    • Tenure: 8.3yrs
    • Compensation: CA$2.43m
  • Nicole Rondou

    Vice President of Compliance

    • Tenure: 0yrs
  • Denis Girouard

    Chief Transformation Officer

    • Tenure: 3.5yrs
    • Compensation: CA$6.90m
  • Claude Breton

    Vice-President of Public Affairs & Corporate Social Responsibility

    • Tenure: 0yrs
  • Martin Gagnon

    Executive VP of Wealth Management & Co-President and Co-CEO of National Bank Financial

    • Tenure: 8.9yrs
    • Compensation: CA$3.22m
  • Dominic Paradis

    VP of Legal Affairs & Corporate Secretary

    • Tenure: 0yrs
  • Linda Boulanger

    Vice President of Investor Relations

    • Tenure: 0yrs
  • Manuel Morales

    Chief Scientist of Artificial Intelligence

    • Tenure: 1.6yrs
  • Nathalie Généreux

    Executive Vice-President of Operations

    • Tenure: 0.9yrs

Board Members

  • Pierre Boivin (65yo)

    Independent Director

    • Tenure: 6.7yrs
    • Compensation: CA$170.00k
  • Lino Saputo (52yo)

    Independent Director

    • Tenure: 7.7yrs
    • Compensation: CA$140.46k
  • Maryse Bertrand (60yo)

    Independent Director

    • Tenure: 7.7yrs
    • Compensation: CA$209.06k
  • Karen Kinsley (62yo)

    Independent Director

    • Tenure: 5yrs
    • Compensation: CA$172.50k
  • Patricia Curadeau-Grou (64yo)

    Independent Director

    • Tenure: 0.7yrs
    • Compensation: CA$3.19m
  • Jean Houde (73yo)

    Independent Chairman of the Board

    • Tenure: 5.7yrs
    • Compensation: CA$357.50k
  • Louis Vachon (56yo)

    President

    • Tenure: 12.5yrs
    • Compensation: CA$8.87m
  • Raymond Bachand (71yo)

    Independent Director

    • Tenure: 5.2yrs
    • Compensation: CA$147.50k
  • Pierre Thabet (61yo)

    Independent Director

    • Tenure: 8.8yrs
    • Compensation: CA$132.50k
  • Jill Denham (58yo)

    Independent Director

    • Tenure: 9.2yrs
    • Compensation: CA$132.50k

Company Information

National Bank of Canada's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: National Bank of Canada
  • Ticker: NA
  • Exchange: TSX
  • Founded: 1859
  • Industry: Diversified Banks
  • Sector: Banks
  • Market Cap: CA$24.129b
  • Shares outstanding: 334.20m
  • Website: https://www.nbc.ca

Number of Employees


Location

  • National Bank of Canada
  • National Bank Tower
  • 4th Floor
  • Montreal
  • Quebec
  • H3B 4L2
  • Canada

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
NATSX (The Toronto Stock Exchange)YesCommon SharesCACADFeb 1980
NBCDB (Deutsche Boerse AG)YesCommon SharesDEEURFeb 1980
NTIO.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDFeb 1980
NA.PRSTSX (The Toronto Stock Exchange)1ST PFD SER 30CACADFeb 2014
NA.PRATSX (The Toronto Stock Exchange)1ST PFD SER 36CACADJun 2016
NBKC.FOTCPK (Pink Sheets LLC)1ST PFD SHS 38USCADJun 2017
NA.PRETSX (The Toronto Stock Exchange)5Y PFD 40 NVCCCACADJan 2018
NA.PRGTSX (The Toronto Stock Exchange)NCUM PFD SH 42CACADJun 2018

Biography

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; Person ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/13 23:43
End of Day Share Price2019/12/13 00:00
Earnings2019/10/31
Annual Earnings2019/10/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.