For one thing, CM is not yet interlisted (listed on NYSE). The following is a paste;
Comments from 4/1/97 ... ($31.30)
RECOMMENDATION: Based on recent price weakness we are raising our
recommendation from an accumulate to an outright Buy, for a 25% total
one-year return.
RECENT EVENTS: CIBC has traded off 12.2% from its highs of '97, slightly
less than the 13-16% range registered by the Canadian inter-listeds.
VALUATION/SHARE PRICE IMPACT: Neverthless, CIBC remains very attractive,
priced at 10X trailing earnings(compare to 12X for Royal and TD), at 9.3X
'97 earnings (compare to 11X for Royal, BNS and BMO), at 8.6X '98 earnings
(compare to 10X for the group). This discount is excessive based on an
overblown view of CIBC's relative reliance on trading profits. Those
profits contribute an estimated 5% to earnings more than the its peers, and
is offset by CIBC's 5% higher capital levels (delevering the earnings
yield, and providing additional price and earnings shock support).
Furthermore CIBC is provisioning for loan losses at a more "normalized"
level than its competitors, the equivalent of roughly $0.10 per quarter,
or 5% of earnings overall, based on the latest quarter comparison with
group.
My comments; this is from Jamie Keating at Midland. Lately he has suggested switching from other Big 5s, and especially RY, into CM. I have come to respect his judgement over time. If you like low P/Es, check out DJN.A, LB, SMS and CWB. I have a position in all of them, along with a little CM. I had some NA, but just let it go, it was getting a little rich considering the political risk, imho....... |
