NEW YORK - Canada's 5th largest bank reported their second quarter results today. The company said it earned $636 million or nearly $200 million less than PNC Financial the 6th largest bank in the U.S. by assets. Despite this shortcoming and the $1.2 billion haircut given to its stock today; the company still has a $2 billion higher valuation than PNC Financial.
TD Bank reported $1.3 billion of profit. The company has a market capitalization closing in on Bank of America despite BAC reporting $2 billion in a terrible quarter. It is interesting to see BAC valued at $115 billion and TD valued at $75 billion when $1.4 trillion of assets and $20 billion of earnings separate the companies. U.S. Bancorp valued at $50 billion has similar earnings capability yet it receives 66% of the valuation. USB has had the highest quality management over the last 10 years often returning over 40% on tangible equity. A ratio unheard of in the bank sector. A smart investors never compares to companies and says one is undervalued. At the same time smart investors don't invest in TD's when USB's are available. The question is, is USB undervalued? The answer is for the investor to determine. But the ones who buy TD when USB is there make for incorrect valuation in the market.
It proves true the oft heard expression that you "pay a wonderful price for a rosy headlines."
To read the full BAC report click here.
To read the full PNC report click here.
To read the full USB report click here.
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