In our last Number Cruncher, we discussed how National Bank of Canada (NA:TSX), Great West LifeCo Inc. (GWO:TSX) & Sun Life Financial Inc (SLF:TSX) are companies with attractive valuation providing opportunities for current interest rate environment.
National Bank’s SP Score increased by 1 point to 72 compared to 90 days prior, comprising a Performance Score of 68.1 and a Risk Score of 17.5. National Bank’s strongest factors compared to its peers are Quality and Volatility. The company had a great sales growth of 39.1% in the last year, and the 5-year average sales growth of 24.4%. The company also showcases stability in its Earnings with 5Y average Earnings per share growth rate of 13.5%.
The intrinsic value chart depicts an exponential increase in the intrinsic value of the company for trailing 12 months. Our estimation shows that the company has been undervalued since May 2021. It can be seen to be creating value, growing its intrinsic price, and widening the gap with its market price in all the subsequent quarters. National Bank continues to be one of the largest bank selling at a compelling valuation.
The Great West Lifeco Inc currently has an SP Score of 69 which has increased by 5 in the past 90 days. The SP Score is based on a performance score of 64.3 and a risk score of 16.2. Currently, Great West LifeCo’s top factors are volatility scoring 74, quality, scoring 72, and value, scoring 72. The company experienced 19.8% performance spread growth and has maintained an incredible 5-year average performance spread growth of 63.1%. Performance spread indicates company’s ability to generate value over its cost of capital thereby showcasing value creation for shareholders.
The EVA and NOPAT graph for the last 4 quarters exhibits the company’s stable NOPAT growth to all time highs. The EVA graph also showcases the sudden growth in intrinsic value for the shareholders. The future value growth graph reflects to be the below 0, which can be explained through the declining share price. The better performance spread & stable NOPAT growth, along with negative FGV indicates strong fundamentals and the stock seems to be available for a discount.
Sun Life Financial Inc current SP Score is 71, it grew by 2 in the past 90 days. Their performance score is 67.6 and their risk score is 18.6. The company’s strongest factors compared to its peers are quality and volatility with respective scores of 78 and 72. Sun Life had an outstanding performance spread growth of 220.7% year and has been able to maintain an exceptional average performance spread growth of 290.1% in the past 5 years.
Sun Life Financial’s annual Return on Capital (ROC) was 15.9% and the 5-year average ROC was 12.4%. Company’s economic performance index was 1.7x, indicating an impressive spread of ROC over the cost of capital and can be seen to exponentially growing. Looking at the 3Y average EVA growth rate of 290.4% indicates an impressive economic wealth creation for the shareholders. StockPointer estimates the value of the stock at the price of $86.45 (26.1% upside) and gives a buy recommendation.
If you have any questions about the article, feel free to contact Anthony:
amenard@inovestor.com
