Market Overview

Price Over Earnings Overview: The Toronto-Dominion Bank

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Right now, The Toronto-Dominion Bank Inc. (NYSE: TD) share price is at $45.54, after a 1.36% drop. Over the past month, the stock went up by 11.32%, but over the past year, it actually fell by 21.72%. With questionable short-term performance like this, and great long-term performance, long-term shareholders might want to start looking into the company's price-to-earnings ratio.

The stock is currently higher from its 52 week low by 34.97%. Assuming that all other factors are held constant, this could present itself as an opportunity for investors trying to diversify their portfolio with Diversified Banks stocks, and capitalize on the lower share price observed over the year.

The P/E ratio is used by long-term shareholders to assess the company’s market performance against aggregate market data, historical earnings, and the industry at large. A lower P/E indicates that shareholders do not expect the stock to perform better in the future, and that the company is probably undervalued. It shows that shareholders are less than willing to pay a high share price, because they do not expect the company to exhibit growth, in terms of future earnings.

Most often, an industry will prevail in a particular phase of a business cycle, than other industries.

Compared to the aggregate P/E ratio of the 17.23 in the Diversified Banks industry, The Toronto-Dominion Bank Inc. has a lower P/E ratio of 11.05. Shareholders might be inclined to think that they might perform worse than its industry peers. It’s also possible that the stock is undervalued.

price to earnings ratio is not always a great indicator of the company's performance. Depending on the earnings makeup of a company, investors can become unable to attain key insights from trailing earnings.

 

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Posted-In: p/e ratioIntraday Update Markets