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What are we looking for?

Artificial Intelligence at Report on Business uses the power of AI to create a fundamental valuation for every TSX stock after-market each day. Then it sorts them out to look for potentially underpriced winners.

The screen

The TSX Composite Banks Index (TXBA-I) is down 9 per cent in the past 52 weeks. Bank stocks are so beaten down that it is worth checking to see if some are starting to look cheap.

ROB AI analyzed every TSX and TSX Venture Exchange company in the banking industry to look for the biggest differences between what AI thinks they are worth on paper and their actual current trading price.

Valuations are generated using a proprietary algorithm from up to six data calculations with an approach that has been historically correct 78 per cent of the time.

What we found

Undervalued Canadian bank stocks

TICKERCOMPANYLASTVALUATION$DIF%DIFAVG VOLCAP ($M)YIELD (%)P/E
FDI-XFindev0.50.60.119.494,49214.362.5
AI-TAtrium Mortgage12.2213.51.2810.4745,334646.17.411.5
LB-TLaurentian Bank of Canada34.4937.883.399.84125,2851,497.305.27.1
TII-XTerra Firma Cap6.57.120.629.5560436.73.710.2
EQB-TEQB64.9869.94.927.5799,2842,276.301.98.6
DLCG-TDominion Lending Centres3.13.330.237.294,168150.33.919.9
MKP-TMCAN Financial16.3417.060.724.415,159523.58.89.2
VBNK-TVersaBank10.2110.560.353.422,838280112.9
BCF-XBuilders Capital Mortgage9.239.410.181.9429327.48.610.1
FC-TFirm Cap Mortgage11.5311.720.191.6923,343500.88.112.3

Source: Barchart/Stockcalc

The list is sorted in descending order by stocks with the greatest percentage difference between valuation and price. Companies on this list are worthy of further research, including:

  • Laurentian Bank LB-T is a large-cap lender based in Montreal. It yields 5 per cent and trades at seven times earnings. Its share price is off almost 20 per cent in the past year. However, earnings grew by 291 per cent over the same period and its dividend payout has continuously grown since a large cut made in the 2020 pandemic environment.
  • EQB EQB-T is the largest bank in the list. It provides specialty lending and is based in Toronto. EQB recently raised its dividend and boasts a unanimous “buy” rating from analysts. EQB was recently featured in Jennifer Dowty’s Tuesday TSX Breakout for its forecast return of 23 per cent and dividend growth of at least 20 per cent.
  • Dominion Lending Centres DLCG-T is a Calgary-based mortgage broker services company trading at around $2.65. Dominion is sensitive to the stability of the Canadian housing market, which accounts for a stock price drop of 17 per cent over the past year. However, the market is showing waves of optimism for 2023.

More about Artificial Intelligence at Report on Business

Artificial Intelligence at Report on Business scans market data using algorithms to process large quantities of information. The results are specialized reports produced through automation.

Continuing ROB project experiments that leverage artificial intelligence include valuation screens across 14 categories and end-of-day closing summary reports for all North American securities.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 24/04/24 9:30am EDT.

SymbolName% changeLast
LB-T
Laurentian Bank
-0.92%25.97
EQB-T
EQB Inc
+0.67%89
DLCG-T
Dominion Lending Centres Inc
-0.66%3
FDI-X
Findev Inc
0%0.38
AI-T
Atrium Mortgage Investment Corp
-0.54%11.14
MKP-T
Mcan Mortgage Corp
+0.89%15.89
VBNK-T
Versabank
+2.87%13.64
BCF-X
Builders Capital Mortgage Corp
0%8.75
FC-T
Firm Capital Mortgage Inv. Corp
-0.54%11.01
TXBA-I
TSX Composite Banks Index
-1.01%3948.47

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