Is This Dividend Stock Discounted Right Now?

Laurentian Bank (TSX:LB) stock has plunged 31% in 2018 as of close on December 6. It has been a difficult year for Laurentian Bank, but it did manage to close the book on a mortgage underwriting crisis that kicked off its steady decline.

The bank released its fourth-quarter and full-year results on December 5. Laurentian Bank’s fourth-quarter net income fell 13% year-over-year to $50.8 million on lower revenue and loan volumes.

Diluted earnings per share dropped to $1.13 compared to $1.42 in the prior year. Both numbers missed analyst consensus estimates heading into Q4.

However, for the full year, Laurentian Bank did realize an improvement from 2017. Total net income climbed 9% to $224.6 million compared to $206.5 million last year. Laurentian Bank still boasts solid liquidity heading into 2019. It will continue to wrestle with merging its branch network next year in response to declining foot traffic. Laurentian Bank’s commercial loan book has continued to post strong growth in successive quarters.

Laurentian Bank stock had an RSI of 28 as of close on December 6. This indicates that the stock is oversold right now. Back in the summer Laurentian Bank raised its quarterly dividend to $0.64 per share. In this quarter it boosted its dividend once again to $0.65 per share. This represents a very attractive yield of 6.5%.

By 2021, Laurentian Bank aims to boost its commercial loan book to $16 billion and its residential mortgage book to $19 billion, representing 12% and 17% growth. It also forecasts to increase client deposits by 24.4% to $28 billion.