The Toronto-Dominion Bank (TSE:TD) shareholders are probably feeling a little disappointed, since its shares fell 4.9% to CA$78.26 in the week after its latest second-quarter results. Revenues were in line with forecasts, at CA$13b, although statutory earnings per share came in 11% below what the analysts expected, at CA$1.72 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Toronto-Dominion Bank after the latest results.
Taking into account the latest results, the consensus forecast from Toronto-Dominion Bank's ten analysts is for revenues of CA$49.7b in 2023, which would reflect a reasonable 2.2% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to decline 11% to CA$6.96 in the same period. In the lead-up to this report, the analysts had been modelling revenues of CA$50.5b and earnings per share (EPS) of CA$7.51 in 2023. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a small dip in their earnings per share forecasts.
The consensus price target held steady at CA$91.98, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Toronto-Dominion Bank at CA$104 per share, while the most bearish prices it at CA$78.00. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Toronto-Dominion Bank's revenue growth is expected to slow, with the forecast 4.5% annualised growth rate until the end of 2023 being well below the historical 6.4% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 5.6% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Toronto-Dominion Bank.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Toronto-Dominion Bank. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Toronto-Dominion Bank's revenues are expected to perform worse than the wider industry. The consensus price target held steady at CA$91.98, with the latest estimates not enough to have an impact on their price targets.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Toronto-Dominion Bank analysts - going out to 2025, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Toronto-Dominion Bank that you should be aware of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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