Fact based stock research
National Bank of Canada (TSX:NA)

CA6330671034

How to read the free ranks

For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).

(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.

National Bank of Canada stock research in summary

nbc.ca

ANALYSIS: With an Obermatt Combined Rank of 84 (better than 84% compared with investment alternatives), National Bank of Canada (Diversified Banks, Canada) shares have much better financial characteristics than comparable stocks. Shares of National Bank of Canada are low in value (priced high) with a consolidated Value Rank of 40 (worse than 60% of alternatives). But they show above-average growth (Growth Rank of 65) and are safely financed (Safety Rank of 94, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 84, is a strong buy recommendation based on National Bank of Canada's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company National Bank of Canada exhibits low value (Obermatt Value Rank of 40), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 65). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 94) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	40
Growth Rank	65
Safety Rank	94
Combined Rank	84

Country	Canada
Industry	Diversified Banks
Index	Human Rights, Renewables Users, TSX Composite
Size class	XX-Large

This stock has achievements: Top 10 Stock.

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: National Bank of Canada

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	21	73	45	40
GROWTH
GROWTH	87	71	71	65
SAFETY
SAFETY	97	39	29	94
SENTIMENT
SENTIMENT	n/a	66	31	^new
360° VIEW
360° VIEW	n/a	85	33	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 31-Jul-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better National Bank of Canada is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	21	73	45	40
GROWTH
GROWTH	87	71	71	65
SAFETY
SAFETY	97	39	29	94
COMBINED
COMBINED	90	85	39	84

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of National Bank of Canada the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 40 (worse than 60% compared with alternatives), National Bank of Canada shares are more expensive than the average comparable stock. The Value Rank is based on consolidating four value indicators, with half of the indicators below and half above average for National Bank of Canada. Price-to-Profit (also referred to as price-earnings, P/E) is 62 which means that the stock price compared with what market professionals expect for future profits is lower than for 62% of comparable companies, indicating a good value concerning National Bank of Canada's profit levels. The same is valid for Price-to-Book Capital (also referred to as market-to-book ratio) with a Price-to-Book Rank of 9, which means that the stock price is lower as regards to invested capital than for 9% of comparable investments. On the other hand, Price-to-Sales is less favorable than 63% of alternatives (only 37% of peers have an even less favorable ratio). The same is valid for dividend yield, which is lower than 26% of comparable companies, making the stock more expensive as regards to the company's expected dividend payouts. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 40, is a hold recommendation based on National Bank of Canada's stock price compared with the company's operational size and dividend yields. This is a puzzling picture, because it means that profits are high while dividends are low. Since the stock price is low compared with invested capital but high in respect to expected revenues, it means that the company has more invested capital than peers for generating the same amount of revenue. Since profits are higher, it could be a "cash cow" situation (using the classic Boston Consulting BCG matrix naming convention) where the company is on a downward trend, still living from the profits of past products. As the company pays low dividends, it may harbor the opinion that a turnaround is possible, and it rather invests the cash than pay it out to shareholders, thus sealing the company's fate early. Any investment optimism should only be a buy trigger once thorough research is completed. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	23	73	40	37
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	45	89	69	62
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	8	15	15	9
DIVIDEND YIELD
DIVIDEND YIELD	46	85	80	74
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	21	73	45	40

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of National Bank of Canada; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 65 (better than 65% compared with alternatives), National Bank of Canada shows an above-average growth dynamic in its industry. Investors also speak of positive momentum. The Growth Rank is based on consolidating four value indicators, with all but one indicator above average for National Bank of Canada. Sales Growth has a rank of 61 which means that currently, professionals expect the company to grow more than 61% of its competitors. Both Profit Growth, with a rank of 67, and Stock Returns, with a rank of 63, are also above average. But Capital Growth only has a rank of 33, which means that, currently, professionals expect the company to grow its invested capital less than 67% of its competitors. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 65, is a buy recommendation for growth and momentum investors. That may be a good sign if the company is already well positioned and doesn't require more investments at this time. They may focus on growing the top (revenues) and bottom (profits) lines, recently rewarded with above-average stock returns for shareholders. But it may also be a sign of danger as the company is falling back with capital investment activities concerning competition. This requires further analysis of corporate communications. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	79	64	79	61
PROFIT GROWTH
PROFIT GROWTH	8	8	52	67
CAPITAL GROWTH
CAPITAL GROWTH	n/a	93	10	33
STOCK RETURNS
STOCK RETURNS	74	67	79	63
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	87	71	71	65

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of National Bank of Canada.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 94 (better than 94% compared with alternatives) for 2024, the company National Bank of Canada has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of National Bank of Canada is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for National Bank of Canada. Refinancing is at 89, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 89% of its competitors. Liquidity is also good at 92, meaning the company generates more profit to service its debt than 92% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 29, which means the company has an above-average debt-to-equity ratio. It has more debt than 71% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 94 (better than 94% compared with alternatives), National Bank of Canada has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and National Bank of Canada could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with National Bank of Canada and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	100	38	28	29
REFINANCING
REFINANCING	72	12	1	89
LIQUIDITY
LIQUIDITY	68	72	85	92
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	97	39	29	94

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of National Bank of Canada and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	17	43	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	63	6	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	36	28	^new
MARKET PULSE
MARKET PULSE	n/a	96	74	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	66	31	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for National Bank of Canada.
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