TORONTO-DOMINION BANK $82 - Toronto symbol TD

TORONTO-DOMINION BANK $82 (Toronto symbol TD; Conservative Growth Portfolio, Finance sector; Shares outstanding: 916.1 million; Market cap: $75.1 billion; Price-to-sales ratio: 2.5; Dividend yield: 3.8%; Stonework Rating: Above Average;www.td.com) recently agreed to buy the U.S. credit card portfolio of retailer Target Corp. (New York symbol TGT). TD will pay an amount equal to these loans’ $5.9-billion U.S. value. In addition, under a new seven-year deal, TD will become the exclusive issuer of Target-branded cards in the U.S.

Meanwhile, the bank earned $7.1 billion (Canadian)in its 2012 fiscal year. That’s up 10.0% from$6.4 billion in fiscal 2011. Because of more shares outstanding, earnings per share rose at a slower pace of 8.2%, to $7.42 from $6.86. Revenue increased6.7%, to $23.1 billion from $21.7 billion.

Earnings at TD’s Canadian retail banking division(which supplies 49% of the bank’s total earnings) rose 11.7% thanks to strong loan demand and the bank’s purchase of MBNA’s Canadian credit card operations. High loan demand also pushed up earnings at the U.S. division (20% of the total) by 12.0%. The wealth management division’s earnings (19%) rose 4.0%. Earnings from securities trading (12%) increased 8.0% as low interest rates prompted businesses to issue more bonds.

TD will probably earn $7.76 a share in 2013. The stock trades at 10.6 times that estimate. The $3.08dividend yields 3.8%.

TD Bank is a buy.

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