When a Bank Gets Treated Like an Oil Producer
Canadian Western Bank is an Alberta based bank with approximately 41 branches, eight trust locations, two insurance offices, a commercial equipment leasing centre and two wealth management locations. The Company’s divisions include National Leasing, Canadian Western Trust, Valiant Trust, Canadian Direct Insurance, Adroit Investment Management, McLean & Partners Wealth Management and Canadian Western Financial.
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The falling price of oil has created a lot of casualties and a few opportunities. CWB is a top quality bank that is being valued as if it is an oil producer. Though they will certainly be downgraded by analysts, we believe that the current valuation has factored in more than a fair share of bad news.
Purple Chips 12 -18 month target: $40.00
LOW VALUATION IN CDN WESTERN BANK AT $32.81 (CWB-T, $CAD 32.55) - FULL POSITION
PURPLE CHIPS TARGET: $40.00 POSITION SIZE: FULL (5.0%) P/E: 12.6X DIV: $0.80 (2.42%) MKT CAP: $2.6B Debt: $1B RETURN ON CAPITAL: N/A EARNINGS YIELD: 9.1% 5 YR EPS Growth rate*:12.1% P/E/G Ratio: 1.04X 2014 EPS: $2.70 2015 EST.: $3.18 2016 EST.: $3.29
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
