TD Bank (TSX:TD) Q3 Profit Strength Clashes With Forecast 11% Earnings Decline Narrative

Toronto Dominion Bank (TSX:TD) has posted Q3 2025 results with revenue of about CA$14.3 billion and EPS of CA$1.89, signaling another profitable quarter following a much stronger trailing year. The bank has seen revenue move from roughly CA$13.1 billion in Q3 2024 to CA$14.3 billion this quarter, while trailing twelve month EPS has climbed from CA$4.25 a year ago to CA$11.69, giving investors a clearer view of how earnings power has reset alongside wider net margins.

See our full analysis for Toronto-Dominion Bank.

With the latest numbers on the table, the next step is to compare these results with the dominant narratives around TD to see which stories the data supports and which ones begin to weaken.

See what the community is saying about Toronto-Dominion Bank

169% EPS Surge Meets Forecasted 11% Drop

• Over the last 12 months, TD generated about CA$20.3 billion in net income and CA$11.69 in EPS, yet analysts expect earnings to fall by roughly 11% per year over the next three years.
• Bears point to that forecasted 11% annual earnings decline as evidence that the recent 169.4% earnings growth is not sustainable, yet
  • the trailing net profit margin of 32%, compared with 14.4% a year ago, shows profitability is currently much stronger than the backward-looking five-year trend of roughly flat growth at -0.3% per year, and
  • the latest Q3 net income of about CA$3.2 billion and trailing revenue of roughly CA$63.4 billion suggest the business is still generating sizable profits even as models build in lower earnings ahead.

32% Margin Versus Rising Credit Strain

• Non-performing loans rose from CA$4.2 billion in Q3 2024 to CA$5.3 billion in Q3 2025 while the cost-to-income ratio hovered around 58%, so TD is balancing higher asset quality stress against a still solid 32% trailing net margin.
• Bears argue that exposure to Canadian real estate and heavier regulatory and compliance costs will pressure margins and credit quality,
  • and the move in non-performing loans from CA$4.9 billion at the end of 2024 to CA$5.3 billion now aligns with that cautious view on credit risk,
  • while the cost-to-income ratio staying in the high 50s, between 57.6% and 59% across recent quarters, fits the narrative that structurally higher expenses could limit how much of TD’s revenue turns into profit.

Over Q3, TD’s margin strength is running into exactly the credit and cost pressures skeptics have been flagging, making the bearish narrative worth stress testing now. 🐻 Toronto-Dominion Bank Bear Case

Valuation Discount And 3.5% Dividend

• At a CA$120.10 share price, TD trades on a 10.1x P/E multiple that is below both the North American banks average of 11.7x and a peer average of 15.7x, and sits about 27.6% under a CA$165.90 DCF fair value estimate while offering a 3.5% dividend yield.
• Bulls highlight that combination of lower P/E, DCF discount and steady income as a potential opportunity,
  • with the 27.6% gap between the current price and the CA$165.90 DCF fair value indicating the market is not fully pricing in TD’s CA$20.3 billion of trailing net income,
  • and the 3.5% dividend yield giving investors tangible cash returns even if near-term forecasts for roughly 11% annual earnings declines prove accurate.

For investors who see recent profitability as more durable than the models suggest, this mix of discounted valuation and income support could justify taking a closer look at the bullish case. 🐂 Toronto-Dominion Bank Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Toronto-Dominion Bank on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

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A great starting point for your Toronto-Dominion Bank research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

TD’s earnings outlook points to forecast declines and rising credit strain, suggesting that recent profit strength might not hold through the next few years.

If that combination makes you cautious, use our stable growth stocks screener (2081 results) to quickly shift your focus toward companies with more consistent earnings trajectories and potentially smoother long term compounding.

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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