National Bank (TSX:NA) is the smallest of the big six Canadian banks and it possesses a large footprint in its home province of Quebec.
Because of this, National Bank is often overlooked among the big bank stocks. This should not be the case. National Bank has been one of the highest performers in the back half of this decade and it boasts a solid dividend.
The bank released its third quarter 2019 results on August 28. Net income rose 7% year-over-year to $608 million and diluted earnings per share increased 9% to $1.66.
National Bank reported earnings growth in its of its segments, with the strongest growth coming from its U.S. Specialty Finance and International segment. Personal and Commercial Banking net income climbed 11% to $277 million on the back of mortgage lending growth.
This latter increase is encouraging as Canada’s housing market has bounced back nicely in the spring and summer of 2019. Quebec was an outlier for much of 2017 and 2018 as its housing market remained in good health in comparison to major metropolitan areas in British Columbia, Alberta, and Ontario. It has also benefited from the lack of a foreign buyer tax.
Shares of National Bank have increased 21% in 2019 as of close on September 26. The stock possesses a middle-of-the-road price-to-earnings ratio of 10.7 and a price-to-book of 1.8.
It also boasts a 4.1% dividend yield. Shares last had an RSI of 80, putting it well into technically overbought territory. I like National Bank going forward, but shareholders may want to consider taking profits right now. Prospective buyers should await a more appealing entry point.
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