Let's talk about the popular Canadian Imperial Bank of Commerce (TSE:CM). The company's shares received a lot of attention from a substantial price increase on the TSX over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. However, what if the stock is still a bargain? Let’s examine Canadian Imperial Bank of Commerce’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.
What is Canadian Imperial Bank of Commerce worth?
According to my valuation model, Canadian Imperial Bank of Commerce seems to be fairly priced at around 19% below my intrinsic value, which means if you buy Canadian Imperial Bank of Commerce today, you’d be paying a reasonable price for it. And if you believe the company’s true value is CA$113.02, then there isn’t much room for the share price grow beyond what it’s currently trading. What's more, Canadian Imperial Bank of Commerce’s share price may be more stable over time (relative to the market), as indicated by its low beta.
Can we expect growth from Canadian Imperial Bank of Commerce?
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. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Though in the case of Canadian Imperial Bank of Commerce, it is expected to deliver a highly negative earnings growth in the upcoming, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.
What this means for you:
Are you a shareholder? Currently, CM appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock optimal for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.
Are you a potential investor? If you’ve been keeping tabs on CM for a while, now may not be the most optimal time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on CM should the price fluctuate below its true value.
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.
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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. 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. Thank you for reading.