National Bank Q4 Earnings Preview: What to Watch

National Bank of Canada (NA), Canada’s sixth-largest bank, will report its Q4 financial results on December 1 before the opening bell.

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Stock Performance

Year-to-date, the bank stock has jumped by approximately 42% and is currently trading over C$100. Let’s have a look at what analysts are expecting, as strong earnings could push NA stock higher. (See Analysts’ Top Stocks on TipRanks)

Analyst Estimates

Analysts on average are expecting National Bank to report adjusted EPS of C$2.24 in the fourth quarter of 2021, indicating a growth of 32.5% from the prior-year quarter (C$1.69 per share). The estimated revenue is C$2.3 billion, which would represent an increase of 12.3% from the fourth quarter of 2020 (C$2.05 billion).

National Bank topped earnings estimates in the past five quarters and could beat them again in the coming quarter.

Factors to Watch

The market will be looking for growth in Canadian banks’ spending next year as wage pressures intensify, along with long-awaited improvements in net interest margins as interest rates rise.

National Bank, as well as the other Canadian big banks, is expected to resume increasing dividends and share buybacks after a nearly two-year hiatus. National Bank Financial analyst Gabriel Dechaine expects National Bank to raise its dividend by 37%.

Banks are also expected to announce repurchases of around 2% of their outstanding shares on average.

Wall Street’s Take

On November 25, Canaccord Genuity analyst Scott Chan kept a Hold rating on NA with a price target of C$109.50. This implies 7.4% upside potential.

Chan expects National Bank to post EPS of C$2.39 for Q4 2021.

The rest of the Street is neutral on NA with a Hold consensus rating based on one Buy, four Holds, and one Sell. The average National Bank of Canada price target of C$107.42 implies 5.4% upside potential to current levels.