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Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Canadian Imperial Bank of Commerce’s (TSX:CM) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers. Check out our latest analysis for Canadian Imperial Bank of Commerce
Was CM’s recent earnings decline indicative of a tough track record?
For the most up-to-date info, I use data from the most recent 12 months, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This blend allows me to examine different companies on a similar basis, using the latest information. For Canadian Imperial Bank of Commerce, its most recent earnings (trailing twelve month) is CA$4.56B, which, against the previous year’s level, has dropped by -2.21%. Since these values are fairly nearsighted, I’ve created an annualized five-year value for Canadian Imperial Bank of Commerce’s earnings, which stands at CA$3.48B This shows that even though earnings declined against last year, over the long run, Canadian Imperial Bank of Commerce’s profits have been growing on average.
How has it been able to do this? Well, let’s take a look at if it is only a result of an industry uplift, or if Canadian Imperial Bank of Commerce has experienced some company-specific growth. In the last few years, Canadian Imperial Bank of Commerce increased its bottom line faster than revenue by successfully controlling its costs. This has led to a margin expansion and profitability over time. Looking at growth from a sector-level, the Canadian banks industry has been growing, albeit, at a subdued single-digit rate of 6.67% over the past twelve months, and 8.46% over the past five. This shows that whatever tailwind the industry is enjoying, Canadian Imperial Bank of Commerce has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I recommend you continue to research Canadian Imperial Bank of Commerce to get a better picture of the stock by looking at:
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1. Future Outlook: What are well-informed industry analysts predicting for CM’s future growth? Take a look at our free research report of analyst consensus for CM’s outlook.
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2. Financial Health: Is CM’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
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3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 January 2018. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.