TD Bank (TSX:TD): Valuation Insights as New Digital Strategy and Buybacks Target Growth and Efficiency

Toronto-Dominion Bank (TSX:TD) unveiled a multi-year roadmap that places digital transformation, automation, and disciplined capital management at its core. The strategy includes cost-cutting, revived earnings targets, and a commitment to boost shareholder returns.

See our latest analysis for Toronto-Dominion Bank.

TD's strategy overhaul arrives as the share price has largely held its ground in 2025, trading at $111.14, with a one-year total shareholder return just above break-even. Despite slower momentum this year, recent moves such as a major office expansion, selective share buybacks, and revived earnings targets could set the stage for renewed growth and a shift in sentiment as the bank seeks to outpace rivals with tighter cost controls.

If a bank’s transformation story interests you, consider broadening your search—there is a whole world of companies with strong momentum to discover in our fast growing stocks with high insider ownership.

With new targets and major cost-saving plans in place, the question now becomes clear: is TD’s stock still trading at a discount, or are investors already factoring in the bank’s next leg of growth?

Most Popular Narrative: Fairly Valued

Toronto-Dominion Bank's fair value estimate aligns closely with its recent close, suggesting little room for dramatic upside or downside in the near term. The narrative behind this valuation relies on several moving parts, including expectations for revenue and profit trends as the bank enters a new phase of transformation.

Persistent investment in compliance (notably elevated AML remediation, cyber, and fraud prevention costs) is expected to drive higher structural expenses, weighing on net margins and overall earnings growth well into 2026 and 2027, as regulatory scrutiny and associated operational costs remain elevated.

Read the complete narrative.

Curious how rising costs, shifting digital dynamics, and analyst forecasting all feed this valuation? There is a unique blend of tightening profit margins, bold transformation plans, and sector uncertainty hiding beneath the surface. Want the inside story behind the fair value? Dive in to uncover the assumptions analysts are really betting on.

Result: Fair Value of $109.29 (ABOUT RIGHT)

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

However, sustained revenue growth in core banking and successful execution of digital initiatives could still shift expectations and challenge the current valuation outlook.

Find out about the key risks to this Toronto-Dominion Bank narrative.

Another View: Is the Market Missing Something?

While the fair value estimate points to Toronto-Dominion Bank trading about where it should be, comparison using its price-to-earnings ratio tells a different story. TD currently trades at 9.4x earnings, which is well below the industry average of 11.8x and the peer average of 15.3x. Notably, the market's fair ratio for TD is 11.5x. This gap signals potential value, but also prompts investors to question whether lower expectations about future earnings are justified, or if the market is being overly cautious. Could there be more upside than the consensus suggests?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Toronto-Dominion Bank Narrative

If you see the story differently or want to dive into the numbers yourself, you can craft your own perspective in just a few minutes. Do it your way.

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.

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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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