tiprankstipranks
Trending News
More News >
Toronto Dominion Bank (TSE:TD)
TSX:TD

Toronto Dominion Bank (TD) AI Stock Analysis

Compare
4,659 Followers

Top Page

TS

Toronto Dominion Bank

(TSX:TD)

Rating:79Outperform
Price Target:
C$107.00
â–²(13.44%Upside)
TD Bank shows overall strong financial performance with robust revenue growth and a solid balance sheet. Technical indicators are positive, reflecting bullish momentum. Valuation is appealing, with a favorable P/E ratio and dividend yield. The earnings call highlights both strong earnings and challenges from restructuring and macroeconomic factors. The stock is well-positioned, but close monitoring is advised given potential headwinds.
Positive Factors
Cost Management
TD rolled out a restructuring program expected to reduce costs by ~$550-650M/year, with savings reinvested into growth areas of the business.
Earnings Performance
Shares of TD Bank outperformed peers after reporting better than expected earnings driven by strong performance in US Retail and Wholesale Banking.
Leadership and Strategy
New leadership's actions led by CEO Raymond Chun should lead to a more profitable and focused TD, driving superior shareholder returns.
Negative Factors
Earnings Contribution
The sale of TD's stake in Schwab has resulted in a significant decrease in earnings contribution to TD's second quarter, with a decline of approximately 68% from the previous quarter.
Economic Environment
Management characterized the operating backdrop as one with a high degree of uncertainty, reflecting potential economic challenges.
Mortgage Portfolio
TD’s mortgage portfolio declined by 1% quarter-over-quarter in Q2, impacted by substantial repayment activity and low originations.

Toronto Dominion Bank (TD) vs. iShares MSCI Canada ETF (EWC)

Toronto Dominion Bank Business Overview & Revenue Model

Company DescriptionToronto Dominion Bank (TD), one of Canada's largest financial institutions, offers a broad range of financial products and services to over 26 million customers worldwide. Operating in sectors such as personal banking, commercial banking, wealth management, and wholesale banking, TD is recognized for its focus on delivering a superior customer experience through its extensive network of branches and digital platforms. With a strong presence in Canada and the United States, TD continues to expand its reach through strategic acquisitions and partnerships.
How the Company Makes MoneyTD Bank makes money primarily through a diversified revenue model that includes interest income, non-interest income, and wealth management fees. Interest income is generated from lending activities, including personal loans, mortgages, and credit cards, where the bank earns interest on the money it lends. Non-interest income comes from various sources such as service fees, trading income, and insurance premiums. Wealth management and investment services provide another significant revenue stream, earning fees and commissions on assets under management and advisory services. Additionally, TD benefits from strategic partnerships and joint ventures, contributing to its earnings through expanded service offerings and market reach.

Toronto Dominion Bank Earnings Call Summary

Earnings Call Date:May 23, 2025
(Q2-2025)
|
% Change Since: 1.63%|
Next Earnings Date:Aug 28, 2025
Earnings Call Sentiment Neutral
TD Bank Group reported strong earnings and maintained a solid capital position, with significant progress in digital investments and wealth management growth. However, challenges persist with macroeconomic uncertainty, restructuring impacts, and high remediation costs. While the bank is navigating these challenges effectively, the balance of highlights and lowlights suggests a cautious outlook.
Q2-2025 Updates
Positive Updates
Strong Quarter Earnings
TD Bank delivered a strong Q2 2025 with earnings of $3.6 billion and EPS of $1.97. The bank saw robust trading and fee income, and volume growth year-over-year in Canadian Personal and Commercial Banking.
Capital and Reserve Management
The bank's CET1 ratio was 14.9%. TD made good progress on share buybacks, repurchasing 30 million shares for a total of $2.5 billion. Performing reserves were increased by over $0.5 billion over the past two quarters.
Wealth Management and Insurance Growth
TD's Wealth Management and Insurance segment had a strong quarter with Wealth Management revenue up 13% year-over-year. TD Asset Management added $5.3 billion in net institutional assets.
Wholesale Banking Record Revenue
Wholesale Banking achieved record revenue of $2.1 billion, benefiting from market volatility.
Digital and AI Investments
TD announced plans to open a new office for Layer 6, TD's AI research and development center, and continued to enhance AI capabilities in fraud detection and customer service.
Negative Updates
Challenges in Macroeconomic Environment
Uncertainty due to US-China tariffs and policy created economic distortions, affecting business decisions and contributing to volatility in capital markets. Housing activity in Canada slowed, and the job market softened.
Restructuring and Workforce Reduction
TD announced a restructuring program expecting to incur $600 million to $700 million in charges, resulting in annual savings of $550 million to $650 million, but also a 2% reduction in workforce.
US Retail Segment Restructuring and Challenges
TD is winding down its US point-of-sale financing business due to scalability issues. The program is expected to continue into the first half of 2026 with investment portfolio repositioning aimed at an NII benefit.
Increased AML and Governance Costs
US BSA/AML remediation cost $110 million this quarter, with similar investments expected in fiscal 2026, impacting overall expenses.
Company Guidance
During TD Bank Group's Q2 2025 earnings call, the bank provided guidance on several financial metrics. The bank reported robust earnings of $3.6 billion and an EPS of $1.97. The CET1 ratio stood at 14.9%, reflecting strong capital levels. The bank repurchased 30 million shares for a total of $2.5 billion, with plans to deploy $8 billion from the Schwab share sale proceeds for the current NCIB. The quarter saw a decrease in impaired PCLs, demonstrating strong credit performance, while performing reserves increased due to macroeconomic uncertainties. The bank's revenue grew by 9% year-over-year, driven by higher trading and fee income, while expenses rose by 12%. The strategic review led to a $9 billion sale of correspondent loans and plans to wind down the US point-of-sale financing business, enhancing US retail ROE. Additionally, TD announced a restructuring program with expected annual savings of $550 million to $650 million pretax. The bank also highlighted its focus on digital and AI investments, with TD's AI research center, Layer 6, filing over 800 AI patents globally.

Toronto Dominion Bank Financial Statement Overview

Summary
The financial performance is solid with strong revenue growth and a robust balance sheet, highlighted by significant debt reduction. However, challenges include stagnating net income growth and declining operating cash flow, which could impact long-term profitability and liquidity.
Income Statement
75
Positive
The income statement shows a consistent upward trend in total revenue, with a TTM (Trailing-Twelve-Months) revenue of $57.2 billion, up from $55.9 billion in the previous year. However, the net income has slightly decreased to $8.81 billion from $8.84 billion, indicating a slight compression in profitability. The gross profit margin remains robust at 100% as expected for a bank, but the net profit margin has slightly decreased. The EBIT margin decreased from previous periods, while the EBITDA margin shows slight improvement. Overall, revenue growth is strong, but net income growth is slightly stagnating.
Balance Sheet
80
Positive
The balance sheet reflects strong equity with stockholders' equity at $119 billion, and a low Debt-to-Equity ratio given the banking industry standards. The Total Debt has significantly decreased from $460.7 billion to $52.7 billion in the TTM period, which enhances financial stability. The equity ratio is strong, reflecting solid capital management. Overall, the bank's balance sheet is robust with a strong equity base and reduced debt levels.
Cash Flow
70
Positive
The cash flow analysis indicates a decrease in operating cash flow from $54.9 billion to $29.3 billion in the TTM period, which raises concerns about short-term liquidity. Free cash flow has also declined, impacting the free cash flow to net income ratio. However, the bank is managing capital expenditures efficiently. Overall, while cash flow generation has weakened, it remains positive, but the declining trend warrants attention.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
120.11B119.17B51.48B45.76B42.27B43.28B
Gross Profit
53.05B52.00B52.93B45.76B42.27B43.28B
EBIT
10.77B10.83B15.76B35.09B17.92B13.05B
EBITDA
12.83B12.86B15.00B22.19B19.20B14.05B
Net Income Common Stockholders
8.81B8.84B10.78B17.43B14.30B11.89B
Balance SheetCash, Cash Equivalents and Short-Term Investments
220.19B230.49B6.72B179.68B209.50B273.88B
Total Assets
1.93T2.06T1.96T1.92T1.73T1.72T
Total Debt
421.31B460.66B401.81B374.04B256.76B40.96B
Net Debt
270.95B282.64B296.74B228.19B90.87B-129.63B
Total Liabilities
1.82T1.95T1.84T1.81T1.63T1.62T
Stockholders Equity
111.84B115.16B112.11B111.38B99.82B95.50B
Cash FlowFree Cash Flow
27.06B52.76B-67.15B37.49B49.00B230.03B
Operating Cash Flow
29.27B54.94B-39.81B38.95B50.13B231.79B
Investing Cash Flow
-72.81B-45.42B76.23B-31.89B-45.27B-224.12B
Financing Cash Flow
43.41B-9.81B-38.33B-4.82B-5.04B-6.13B

Toronto Dominion Bank Technical Analysis

Technical Analysis Sentiment
Positive
Last Price94.32
Price Trends
50DMA
86.09
Positive
100DMA
83.94
Positive
200DMA
80.66
Positive
Market Momentum
MACD
2.12
Negative
RSI
78.63
Negative
STOCH
89.64
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:TD, the sentiment is Positive. The current price of 94.32 is above the 20-day moving average (MA) of 89.59, above the 50-day MA of 86.09, and above the 200-day MA of 80.66, indicating a bullish trend. The MACD of 2.12 indicates Negative momentum. The RSI at 78.63 is Negative, neither overbought nor oversold. The STOCH value of 89.64 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:TD.

Toronto Dominion Bank Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
TSTD
79
Outperform
$165.22B9.7714.27%4.39%13.12%61.99%
TSCM
79
Outperform
$88.88B12.2413.23%3.93%10.79%18.20%
TSRY
78
Outperform
C$251.25B14.4614.39%3.24%11.51%14.79%
TSNA
78
Outperform
$50.53B11.7615.64%3.42%17.13%14.73%
TSBMO
71
Outperform
$103.97B13.4210.01%4.33%10.57%50.35%
TSBNS
71
Outperform
$90.81B14.728.00%5.83%3.72%-17.99%
64
Neutral
$12.67B9.747.58%17015.08%12.21%-6.96%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:TD
Toronto Dominion Bank
94.32
23.13
32.49%
TSE:NA
National Bank of Canada
129.36
17.71
15.86%
TSE:BMO
Bank Of Montreal
144.86
30.98
27.20%
TSE:RY
Royal Bank Of Canada
177.87
41.78
30.70%
TSE:CM
Canadian Bank of Commerce
94.55
32.85
53.24%
TSE:BNS
Bank Of Nova Scotia
72.91
13.17
22.04%

Toronto Dominion Bank Corporate Events

Executive/Board Changes
TD Bank Group Appoints New Global Head of Financial Crime Risk Management
Positive
Jan 23, 2025

TD Bank Group has appointed Jacqueline Sanjuas as the new Global Head of Financial Crime Risk Management, succeeding Herb Mazariegos. With over 20 years of experience in compliance and risk management, Ms. Sanjuas has been instrumental in enhancing the bank’s U.S. anti-money laundering program since joining TD in January 2024. These leadership changes are expected to strengthen TD’s efforts in financial crime risk management across its global operations.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.