Stock of the Day

March 23, 2022

Canadian Imperial Bank of Commerce (CM)

$60.81
-$0.81 (-1.3%)
Market Cap: $58.07B

About Canadian Imperial Bank of Commerce

Canadian Imperial Bank of Commerce, a diversified financial institution, provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally. The company operates through Canadian Personal and Business Banking; Canadian Commercial Banking and Wealth Management; U.S. Commercial Banking and Wealth Management; Capital Markets and Direct Financial Services; and Corporate and Other segments. It offers checking, savings, and business accounts; mortgages; business, car, and other loans; lines of credit, student lines of credit, and agriculture loans; and small business financing and overdraft protection services. The company also provides investment and insurance services; credit cards; and ATMs, as well as mobile, online, and global money and wire transfer services. Canadian Imperial Bank of Commerce was founded in 1867 and is headquartered in Toronto, Canada.

Canadian Imperial Bank of Commerce Bull Case

Here are some ways that investors could benefit from investing in Canadian Imperial Bank of Commerce:

  • The recent increase in the quarterly dividend to $0.6912 per share, representing an annualized dividend of $2.76 and a yield of 4.44%, indicates a commitment to returning value to shareholders.
  • With a current ratio of 1.05 and a quick ratio of 1.05, Canadian Imperial Bank of Commerce demonstrates solid liquidity, meaning it can cover its short-term obligations effectively.
  • The debt-to-equity ratio of 0.14 suggests that the company is not heavily reliant on debt for financing, which can be a sign of financial stability and lower risk for investors.
  • Institutional investors own 49.88% of the company's stock, indicating strong confidence from large financial entities, which can be a positive signal for individual investors.
  • Recent institutional trading activity, including significant increases in holdings by firms like Massachusetts Financial Services Co. MA and Renaissance Technologies LLC, suggests growing interest and potential for future growth.

Canadian Imperial Bank of Commerce Bear Case

Investors should be bearish about investing in Canadian Imperial Bank of Commerce for these reasons:

  • The dividend payout ratio of 51.22% indicates that over half of the earnings are being distributed as dividends, which may limit the funds available for reinvestment in growth opportunities.
  • Despite the positive liquidity ratios, the current ratio being just above 1.0 suggests that the company is only marginally able to cover its short-term liabilities, which could be a concern in times of financial stress.
  • Recent changes in hedge fund positions, while indicating interest, also reflect volatility in investor sentiment, which could lead to fluctuations in stock price.
  • With a significant portion of the stock owned by institutional investors, individual investors may have less influence on company decisions, potentially leading to a misalignment of interests.
  • The competitive landscape in the financial services sector can pose risks, as market conditions and regulatory changes may impact profitability and growth prospects.

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