Canadian Western Bank (CWB.TO) Buy, Sell or…

Canadian Western Bank (CWB.TO)

56.63

-0.62 (1.08%)

as of Feb 4, 2025, 9:00:00 pm Market Open.

174 watching

DON'T BUY

Largely a regional bank. Reasonable-sized commercial business outside Western Canada. Prefers the bigger banks, with their diversification by line of business and geography. Applauds its efforts to grow, but banking is increasingly a business where size and scale gives the big players an advantage.

WEAK BUY

Management pretty astute. Expanding fairly aggressively in Ontario. Lots of opportunities. Yield is over 5%, relatively safe. Good at measuring credit in the small business sector, and delivering personal service to small business clients. Reasonably good buy if you have a longer term focus.

BUY ON WEAKNESS

The valuation is now attractive. This is not a bad entry point. A risk is compressed net interest margins. Could be more downside on banks given recession fears.

HOLD

Hold or sell? Future ahead. Interest rates have impacted all banks. Focused on western Canada, which has seen a turnaround in last 18 months. Means more business for CWB. Bottomed out, regaining footing and heading back up. Hold, if you have a long time horizon.

BUY

Trading below book value. Issue was it suffered along with western Canada oil and gas, but that part's over. Not expensive, but how do they grow? Historically, has done well in the right environment, especially if oil stays at these levels. Great dividend yield of 5.4%.

Unspecified

He respects the company - it is a trail blazer in new sectors and financing so there is more opportunity. There is good economic pickup and retail business development in the West especially the Prairie provinces, Alberta and Saskatchewan. It is more volatile than the big banks.

SELL

It's fallen below his lowest level of resistance. Market is questioning its balance sheet. Not a good omen for the province of Alberta, as it signals most of the lending is not in this geography.

DON'T BUY

Banks don't have return on invested capital that prefers. Excess capital that can be re-invested not there. Majority of free cash flow paid out in dividends. Would prefer other options in under valued tech sector.

BUY ON WEAKNESS

Recent selloff in shares of the company. Prefers large Canadian banks. Good buy for value investors. Wait to see bottom of market before buying.

DON'T BUY

CWB vs. NA Between these and the Big 5, he'd prefer one of the 5. Between this and NA, he'd prefer NA. NA is better diversified in lines of business and geographically. NA has better scale advantage, management, and capitalization. High single-digit dividend increases from NA are pretty reliable, though its dividend increases may pause if credit losses get too high.

Unspecified

It is a smaller bank and could be a good way to play the oil and gas sector. Or you could consider the service companies. It is a decent company but there are other ways to play the financials. The larger Canadian banks in general show fairly consistent results with an 8 to 10% ROE and 2 to 5% dividend yield. His favourite bank is Royal.

BUY ON WEAKNESS

Results have lagged competitors in market. Large stock selloff has affected share price. Economic downturn is a worry as company not as large as others. If betting on ability for banks to increase margins, would be a good bet. Current yield is over 5% which is attractive. Bet would be on a soft landing of economy.

DON'T BUY

CWB vs. LB He'd buy neither right now. Financials are not necessarily what you want going into a recession. Credit losses can sting. Regional banks are not as well diversified as the bigger banks. No wealth management. CWB is more exposed to commercial and industrial loans, so losses can be greater. CWB edges out LB by a hair.

TOP PICK

It is a cheap bank in a good area of the energy business. It is less than 7 1/2 X forward looking P/E. Is trading at Book Value or even a discount. It is as cheap as it has ever been in 25 years except for the Covid low. Also has a good dividend. Regarding recession, banks usually come through recessions relatively unscathed and can be bought at good discounts. Buy 10, Hold 3, Sell 0. (Analysts’ price target is $37.12)

WEAK BUY

Tough time when oil was down. Now in great shape. Yield is 3.3%, not as high as the big banks. 9x earnings, below book value. Worth looking at. The world is looking a lot better for the banking industry. It will always trade at a lower multiple, as it's regional.

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Canadian Western Bank (CWB.TO)