Tuesday, February 5, 2019

Investing using fundamentals - TD

The second company to be analyzed with our time-value spreadsheet is the Toronto Dominion Bank. The data was obtained from the Globe and Mail using the TD quote. The TD Bank is one of Canada’s big 5 chartered banks that caters heavily towards retail banking with extended branch opening hours; attempts to provide courteous personal services; excellent on-line presence for the retail investor and a large presence in both Canada and the U.S. TD foresaw the limited growth potential of the Canadian markets and now has nearly 50% of its revenue coming from the U.S.  
Figure 1 TD Bank fundamentals. DCF means discounted cash flow method. Click the image for a better quality view.

Look at the earnings graph in the upper right corner and just like Brookfield Infrastructure, TD shows a very strong and consistent trend of earnings growth. For a mature company to show a potential compound rate of return on investment of 6.1% or a potential total return for the coming year of 14% is great. Don’t forget that BIP is just a young spring chicken compared to TD. The steady earnings growth trend speaks volumes about the high quality of TD's earnings, dividend and management - the same for BIP.

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