National Bank of Canada (NA) AI Stock Analysis

• Market Cap: $52.63B
• Dividend Yield: 3.23%
• Average Volume (3M): 1.66M
• Price to Earnings (P/E): 12.7
• Beta (1Y): 0.82
• Revenue Growth: 17.13%
• EPS Growth: 14.73%
• Country: CA
• Employees: 29,508
• Sector: Financial
• Sector Strength: 79
• Industry: Banks - Diversified
• EPS (TTM): 2.85
• Shares Outstanding: 391,340,760
• 10 Day Avg. Volume: 2,132,732
• 30 Day Avg. Volume: 1,663,485
• PEG Ratio: 1.07
• Price to Book (P/B): 1.44
• Price to Sales (P/S): 0.00
• P/FCF Ratio: -12.06
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $140.55
• Price Target Upside: 4.50% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 9

• Rating: 78 Outperform
• Price Target: ―

The National Bank of Canada shows strong financial performance with significant revenue and profitability growth, supported by strategic acquisitions. The stock's valuation is attractive, with a relatively low P/E ratio and solid dividend yield. However, technical indicators suggest caution due to potential overbought conditions, and macroeconomic challenges may impact future growth. Overall, the bank's solid financial foundation and strategic initiatives provide a strong basis for continued performance, though attention to leverage and cash flow management is advised.

Positive Factors

Earnings Growth

National Bank has several levers of earnings growth to pull, including CWB revenue, cost, and funding synergies, a recovery of Corporate and Investment Banking, and the eventual deployment of capital towards a share buyback program.

Financial Performance

National Bank reported Q2 results with earnings strength primarily driven by Financial Markets revenue.

Negative Factors

Credit Challenges

Higher than expected PCLs indicate potential challenges, with the highest quarterly PCL rate since Q1/11 outside of COVID and Oil & Gas sectorals.

Valuation Concerns

NA is trading at a higher NTM P/E ratio of 12.6x compared to peers at 11.6x, leading to a HOLD rating based on valuation concerns.

National Bank of Canada Business Overview & Revenue Model

Company Description

National Bank of Canada provides various financial products and services to retail, commercial, corporate, and institutional clients in Canada and internationally. It operates through four segments: Personal and Commercial, Wealth Management, Financial Markets, and U.S. Specialty Finance and International. The Personal and Commercial segment offers personal banking services, including transaction solutions, mortgage loans and home equity lines of credit, consumer loans, payment solutions, and savings and investment solutions; various insurance products; and commercial banking services comprise credit, and deposit and investment solutions, as well as international trade, foreign exchange transactions, payroll, cash management, insurance, electronic transactions, and complimentary services. The Wealth Management segment comprises investment solutions, trust services, banking services, lending services, and other wealth management solutions. The Financial Markets segment offers corporate banking, advisory, and capital markets services; and project financing, debt, and equity underwriting; advisory services in the areas of mergers and acquisitions, and financing. The U.S. Specialty Finance and International segment provides specialty finance products; financial products and services to individuals and businesses in Cambodia; and investment solutions, guaranteed investment certificates, mutual funds, notes, structured products, and monetization. It provides its services through a network of 384 branches and 927 banking machines. National Bank of Canada was founded in 1859 and is based in Montreal, Canada.

How the Company Makes Money

National Bank of Canada makes money through several key revenue streams. The primary sources of income include net interest income, which is the difference between the interest earned on loans and the interest paid on deposits. Additionally, the bank generates revenue from fees and commissions related to a variety of services such as wealth management, investment banking, and transaction services. The bank also earns income through trading activities and investment gains. Strategic partnerships and collaborations with fintech companies and other financial institutions further enhance its revenue-generating capabilities. Its diversified portfolio and focus on innovation and customer service are significant factors contributing to its earnings.

National Bank of Canada Financial Statement Overview

Summary

The National Bank of Canada demonstrates robust revenue growth and profitability with a strong net profit margin of 24.4% and impressive ROE of 14.74%. However, the balance sheet shows moderate leverage with a debt-to-equity ratio of 3.19, and cash flow indicates some pressure on free cash generation, suggesting areas for improvement in cost management and leverage reduction.

Income Statement

The National Bank of Canada shows robust revenue growth with a consistent increase in total revenue over the periods. The TTM (Trailing-Twelve-Months) data indicates a healthy gross profit margin of 127.8%, and a solid net profit margin of 24.4%. While EBIT margin is 7.82%, the absence of EBITDA data limits a complete analysis. Revenue growth remains strong, indicating effective market strategies and operations, although the decrease in EBIT from earlier periods suggests potential cost pressures.

Balance Sheet

The company's balance sheet reveals a strong equity position with a debt-to-equity ratio of 3.19, indicating moderate leverage. Return on equity (ROE) is impressive at 14.74%, reflecting effective utilization of shareholders' funds. The equity ratio stands at 5.45%, showing a stable financial foundation, though the high leverage could pose risks in volatile market conditions.

Cash Flow

Cash flow analysis highlights a decline in free cash flow growth, but the company maintains a positive operating cash flow to net income ratio of 0.70, suggesting efficient cash management relative to earnings. However, the free cash flow to net income ratio of 0.57 indicates some pressure on free cash generation relative to profits, potentially due to capital expenditure and investment activities.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
11.63B	11.41B	9.77B	9.62B	8.90B	11.12B
	Gross Profit
11.93B	11.41B	10.16B	9.62B	8.90B	7.90B
	EBIT
3.54B	5.06B	4.64B	4.69B	4.44B	3.09B
	EBITDA
1.35B	5.06B	0.00	4.73B	4.46B	2.96B
	Net Income Common Stockholders
3.89B	3.82B	3.34B	3.38B	3.14B	2.04B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
39.05B	35.75B	39.14B	36.34B	36.81B	34.71B
	Total Assets
483.83B	462.23B	423.58B	403.74B	355.62B	331.63B
	Total Debt
84.25B	74.78B	53.51B	44.88B	43.64B	36.49B
	Net Debt
49.64B	43.23B	18.28B	13.01B	9.76B	7.35B
	Total Liabilities
457.44B	436.68B	399.90B	381.99B	336.94B	315.24B
	Stockholders Equity
26.39B	25.55B	23.68B	21.74B	18.68B	16.38B
Cash Flow		Free Cash Flow
2.20B	3.95B	4.51B	-2.59B	5.55B	19.47B
	Operating Cash Flow
-1.01B	4.65B	5.17B	-1.92B	9.31B	19.98B
	Investing Cash Flow
-7.46B	-7.34B	-80.00M	-1.46B	1.39B	-3.35B
	Financing Cash Flow
24.53B	-1.10B	19.51B	-381.00M	-1.74B	25.08B

National Bank of Canada Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 134.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Negative
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NA, the sentiment is Positive. The current price of 134.5 is above the 20-day moving average (MA) of 131.59, above the 50-day MA of 123.59, and above the 200-day MA of 125.68, indicating a bullish trend. The MACD of 3.10 indicates Positive momentum. The RSI at 70.25 is Negative, neither overbought nor oversold. The STOCH value of 68.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:NA.

National Bank of Canada Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
NA	78 Outperform	$52.63B	12.69	13.42%	3.23%	17.13%	14.73%
BMO	77 Outperform	$77.95B	13.95	9.88%	4.12%	15.63%	66.95%
Sector *	64 Neutral	$12.85B	9.81	7.79%	78.20%	12.23%	-7.93%
BNS		$67.37B	15.20	8.00%	5.47%	―	―
CM		$64.04B	11.97	13.19%	3.91%	―	―
RY		$180.91B	14.22	14.17%	3.21%	―	―
TD		$124.02B	10.33	14.27%	4.13%	―	―

National Bank of Canada Corporate Events

National Bank of Canada Reports Strong Q1 2025 Results and Strategic Acquisition

National Bank of Canada reported an 8% increase in net income for the first quarter of 2025, reaching $997 million, driven by revenue growth across all business segments. The recent acquisition of Canadian Western Bank is expected to accelerate domestic growth and enhance the bank’s capabilities, despite challenges posed by macroeconomic and geopolitical uncertainties.

National Bank Completes CWB Tier 1 Capital Reorganization

National Bank of Canada and Canadian Western Bank have completed a reorganization of CWB’s Tier 1 capital, resulting in the exchange of CWB’s First Preferred Shares for new National Bank First Preferred Shares. This strategic move will culminate in an amalgamation of the two banks under the National Bank of Canada name, which is expected to enhance operational efficiencies and strengthen the combined entity’s market position.