Canadian Imperial Bank of Commerce - Momentum

Canadian Imperial Bank of Commerce (CM) recently spiked to a new multi-year high after reporting a solid 15% Q1 earnings surprise in late February. Estimates have since jumped higher, providing more support for this Zacks #1 rank stock.

Company Description

Canadian Imperial Bank of Commerce, with its subsidiaries, offers a wide range of financial services and products to retail and commercial customers primarily in Canada. The company was founded in 1867 and has a market cap of $38 billion.

Much like other financial institutions, CM has seen massive gains over the last two years as the global economy and financial sector has strengthened. But shares got a shot in the arm on February 24 after the company reported another strong quarter that came in ahead of expectations.

First-Quarter Results

Revenue for the period was up 15% from last year to $2.97 billion. Earnings also looked good, coming in at $1.97, 15% ahead of the Zacks Consensus Estimate, the company’s third consecutive earnings surprise.

CM’s largest segment, CIBC Retail Markets, saw sales increase 6% from last year to $2.5 billion. But its biggest gains came from its smaller Wholesale Banking unit, where revenue jumped to $471 million from $238 million.

The bank also noted that it continues to insolate its financial profile and build reserves, with its Tier 1 and Tangible Common Equity ratios both on the upswing.

Estimates

We saw some upward movement in estimates off the good quarter, with the current year adding 42 cents to $7.59. The next-year estimate is up 34 cents in the same time to $7.76, a solid 8% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks solid, where CM’s forward P/E of 11X is a discount to its peers 12X.

12-Month Chart

On the chart, CM has been chugging higher since late last summer, but recently spiked into a new multiyear high on the good quarter. But in spite of the gains, the stochastic below the chart says shares are trading safely away from overbought territory. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.

 
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