Canadian Western Looking A Little Undervalued After A Post-Earnings Sell-Off

Canadian Western Bank (CWB.TO) (OTCPK:CBWBF) has had a mixed track record recently relative to sell-side expectations, with modest misses in two of the last three quarters. It hasn’t hurt the stock too much, though, as the shares have climbed roughly 25% and outperformed most other Canadian banks (Laurentian Bank (OTCPK:LRCDF) has largely kept pace), with investors expecting a meaningful revision in its capital requirements in 2020 and above-average EPS growth.

I continue to be rather ambivalent on Canadian Western shares. Including the post-earnings reaction, the stock is basically unchanged from my last update on the company, and while I like the steps that the company is taking to build its long-term growth potential, I remain concerned about the company’s spread exposure, credit quality, and loan growth prospects in the short term. I think investors will do okay from here as is, but should the shares correct into the mid-to-high C$20’s, I’d be a lot more interested.

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Canadian Western Looking A Little Undervalued After A Post-Earnings Sell-Off