A strong earnings report propels Canadian Bank of Commerce (TSE:CM) higher

It was a great day to be a Canadian bank, especially if you’re generating profits. The Canadian Bank of Commerce is joining the trend (TSE:CM) (NYSE:CM), often called CIBC. No matter what you call it, you can call your earnings report a winner. Investors agreed in a big way, sending CIBC shares up nearly 5% in Thursday afternoon trading.

Most of the CIBC results are good news. Earnings came in at C$1.79 per share, which not only marked an increase over last year’s numbers – 4% in fact – but also far exceeded analyst expectations, which had predicted that CIBC would bring in only C$1.65 per share . Meanwhile, revenues performed even better, reaching C$6.16 billion in the quarter. That’s well above analyst expectations of just C$6.06 billion, which is a nice 8% increase from the prior year.

While net income from operations in Canada increased slightly, there was fantastic improvement in the US. CIBC grew 70% compared to its US operations alone. Even the capital markets division showed profits, up 13% compared to this period last year.

Increasing leverage

This all comes after an earlier report that CIBC poached veteran Barclays to improve the functioning of capital markets. CIBC has acquired Brad Aston, who will be based in New York and will serve as managing director and global head of capital markets leveraged finance. The capital markets arm of CIBC is seeing growth. In fact, over the last five years, CIBC has doubled its revenue from U.S. capital markets, making this a particularly important part of CIBC’s business that requires a solid manager.

Is CIBC stock a buy, sell or hold?

As for Wall Street, analysts have a Moderate Buy consensus rating on CM stock based on five buys, three holds and one sell assigned over the last three months, as shown in the graphic below. With the company’s share price up 28.68% over the last year, CM’s average price target of C$71.77 per share implies a 5.49% upside potential.

Disclosure