Earlier today, National Bank of Canada (TSE:NA) (OTC:NTIOF), one of the “Big Six” Canadian banks, released its Fiscal Q3-2023 earnings report. Both revenue and earnings per share (EPS) missed analysts’ expectations. As a result, the stock finished 3.91% lower on the day.
National Bank’s revenue came in at C$2.58 billion compared to the consensus estimate of C$2.65 billion. Also, diluted earnings per share (EPS) were C$2.21, down nearly 6% from last year’s figure of C$2.35, while analysts were expecting C$2.37 per share. For the past nine months, adjusted diluted EPS came in at C$7.15 compared to C$7.53 last year.
Although the company missed expectations, its quarterly earnings are holding up much better than those of Bank of Nova Scotia (TSE:BNS) (NYSE:BNS) and Bank of Montreal (TSE:BMO) (NYSE:BMO), both of which reported earnings yesterday and experienced adjusted EPS drops of 17.6% and 10%, respectively.
Additionally, NA’s return on equity (ROE) came in at 15.3%, a relatively high figure among Canadian banks. Nonetheless, it fell by 260 basis points (bps) year-over-year, as it was 17.9% in Q3 2022.
On a positive note, National Bank’s Common Equity Tier 1 (CET1) ratio increased by 80 basis points year-over-year to 13.5%. The CET1 ratio is a liquidity ratio calculated by dividing Common Equity Tier 1 (CET1) by risk-weighted assets — a higher number means a bank is more liquid. For reference, the CET1 ratios of BNS and BMO stand at 12.7% and 12.3%, respectively.
Finally, National Bank’s CEO, Laurent Ferreira, stated that the bank saw revenue and earnings growth in its “Personal and Commercial Banking, Wealth Management, and U.S. Specialty Finance and International segments.” Still, this growth was “partly offset by a less constructive backdrop in the Financial Markets segment.”
Is National Bank a Good Stock to Buy, According to Analysts?
According to analysts, National Bank of Canada is a good investment, earning a Moderate Buy consensus rating based on four Buys, three Holds, and one Buy assigned in the past three months. The average NA stock price forecast of C$109.49 implies 13.4% upside potential.
If you’re wondering which analyst you should follow if you want to buy and sell NA stock, the most accurate analyst covering the stock (on a one-year timeframe) is Meny Grauman of Scotiabank, with an average return of 11.33% per rating and a 75% success rate. Click on the image below to learn more.