Q: Hi Team,
What are your thoughts on this company's current valuation and long term growth prospects?
What would be your best estimate as to longer term ROE outlook?
What are your thoughts on this company's current valuation and long term growth prospects?
What would be your best estimate as to longer term ROE outlook?
5i Research Answer:
EQB is a small ($4.1B market cap) challenger bank with a decent yield of 1.8%, a cheap forward earnings multiple of 8.7X, and double-digit earnings growth rate estimates for the next three years. Its margins are strong, and it has a history of an ROE above 15%. It has diversified its business into non-interest earning segments, which we feel can act as a driver of growth in the coming years. Our latest report on the company from October can be found here. Long-term, we feel its ROE can manage 15%+. Overall, we continue to like EQB as a high-growth financials name in Canada.