CANADIAN IMPERIAL BANK OF COMMERCE /CAN/ (CM): what the price requires
At today's price, CANADIAN IMPERIAL BANK OF COMMERCE /CAN/ (CM) is priced for 16.1% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/CM
Headline
| Field | Value |
|---|---|
| Ticker | CM |
| Company | CANADIAN IMPERIAL BANK OF COMMERCE /CAN/ |
| Sector / Industry | Financial Services / Banks—Regional |
| Current price | $121.27/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Price-to-book | 2.46x |
| Return on equity now | 13.1% |
The implied return on book is non-physical at this price-to-book and is suppressed as misleading. The price sits beyond a 12.4% return on equity sustained for 40 years and is not resolvable as a sustainable-ROE point. The rarity read below is the honest signal.
Solve inputs: computed at a 8.9% cost of equity; ROE searched up to the 12.4% ROE ceiling.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +1.54σ |
| cohort percentile (of 120 peers) | 94 |
| sustained it ~10 years at this level | 57% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple value, while growth-DCF lands below the price. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.33x | 3 | expensive |
| Earnings | 1.06x | 2 | expensive |
| Relative | 0.72x | 3 | justifies |
| Growth | 1.56x | 2 | expensive |
Families that justify the price: Earnings, Relative Families that call it expensive: Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 2.6%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $104.88 | 1.16x | yes | TBVPS $47.92 × 2.19x (ROE (TTM) 14.3% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption)) |
| Relative Valuation | Relative | $84.30 | 1.44x | yes | P/E 11.88x (blended: static sector reference 10x + trailing (TTM) 16x), scenarios: 10.0x / 11.9x / 13.7x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $123.52 | 0.98x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $80.66 | 1.50x | yes | BV/sh $52.17, ROE (TTM) 14.3%, ke 9.3% |
| Two-Stage Excess Return | Asset | $99.21 | 1.22x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $56.73 | 2.14x | yes | Rev $32.0B, growth -9% (input: historical growth; tapered), Terminal P/S: 3.0x / 3.5x / 4.0x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $168.67 | 0.72x | yes | EPS $7.10, growth 24% (input: historical EPS growth), PEG=0.68 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $91.27 | 1.33x | yes | √(22.5 × EPS $7.10 × BVPS $52.17) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $228.95 | 0.53x | yes | EPS $7.10 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $253.00 | 0.48x | yes | EPS $7.10 × (PEG 1.5 × growth 23.8% (input: historical EPS growth)) → PE 35.7x |
| Earnings Yield | Earnings | $76.71 | 1.58x | yes | EPS $7.10 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (dilution) | 0.6% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- CIBC compounds its capital at a low-to-mid-teens return across a diversified Canadian and U.S. franchise, and its recent quarters strung together record earnings that ran well ahead of revenue.
- Its roughly $273 billion Canadian residential mortgage book is the single largest credit exposure on the balance sheet, and about 6% of it faces a payment jump of 40% or more as loans renew through 2026.
- The next print, third-quarter fiscal 2026 due in late August, will show whether housing softness is turning into real losses through provisions and rising mortgage impaired-loan formation.
Bull Case
A bank is not valued the way a factory or a software company is. Its product is money, its raw material is customer deposits (funding, not debt), and what it is worth comes down to the return it earns on the capital regulators make it hold. Read CIBC through that lens and the case is straightforward: it has been earning a return on equity around 13.1% on its book, above a cost of equity near 9%, and a bank that earns more on its capital than that capital costs creates value with every dollar it retains. It has turned that spread into eight consecutive quarters of double-digit earnings-per-share growth. Banks that clear their cost of capital by several points, quarter after quarter, are the ones that earn the right to trade above book.
The capital position is the second leg. CIBC ended its April quarter with a common equity tier one ratio of 13.6%, comfortably above the regulatory floor, and it did that while buying back 6.5 million shares in the quarter. On top of that it paid about $3.00 billion in dividends over the trailing year against $6.90 billion of net income, a payout of roughly 43% that leaves ample room for both. The agreement to sell its 91.67% stake in CIBC Caribbean for about US$1.645 billion frees up a further 24 basis points of that capital ratio and sharpens the focus on the core North American bank. This is a bank returning cash and reinvesting from a position of strength, not stretching to fund it.
The third leg is that the earnings are not one line of business. In the April quarter, Canadian personal and business banking produced $846 million of net income, Canadian commercial banking and wealth management $614 million, capital markets $792 million, and U.S. commercial banking and wealth management $260 million. Wealth management and capital markets are fee and trading engines that do not depend on the mortgage book, and net interest margin on average interest-earning assets improved to 1.67% as rates worked in the bank's favor. If the low-to-mid-teens return on equity holds, the premium the market pays over book is not a stretch; it is the arithmetic of a bank that keeps out-earning its cost of capital.
Bear Case
The advantage that made CIBC feel safe is the one now under quiet pressure. Its Canadian residential mortgage book, roughly $273 billion, has for years been a source of low-loss, dependable credit: a domestic retail lender whose borrowers rarely default. That reliability is the moat, and the renewal wall is testing it. About 6% of the book faces a payment increase of 40% or more as mortgages reset through 2026, the gross impaired-loan ratio sat at 66 basis points in the April quarter, and mortgage impaired formations rose again on continued housing softness. Scotiabank cut its rating on the stock to sector perform on growth concerns after that print. The cracks are still hairline, but they are in the wall that was supposed to be load-bearing.
That matters because of what the price already assumes. At $121.27 (July 19, 2026), CIBC trades at about 2.5x book value, and a price-to-book that high asks the bank to keep earning a return on equity beyond the elite tier that banks rarely defend for long, and to hold it there for decades. It has recently earned around 13.1% on that book. History is unkind to that kind of persistence: a little over half of banks earning at this level have sustained it even a decade. If the return mean-reverts toward the cost of equity near 9% as credit normalizes, the multiple the market is willing to pay on book compresses, and the compression does the damage before any loan is ever written off.
The concentration is the amplifier. CIBC's earnings lean heavily on a single economy. In the April quarter the Canadian personal, business, commercial, and wealth operations together produced the bulk of net income while U.S. commercial banking and wealth contributed $260 million. A housing or employment shock in Canada therefore hits the core rather than a diversified base. For scale, JPMorgan earns a return on equity near 15.7% and runs a leaner efficiency ratio around 55%, while the other U.S. money-center banks cluster in the low-to-mid 60s on efficiency. CIBC is the smaller, more concentrated bank carrying the higher multiple, and a premium leaves little cushion for the moment a domestic credit cycle actually turns.
Valuation
A bank is worth the return it earns on its book, so its price is read against book value rather than an operating multiple. At $121.27 (July 19, 2026), CIBC trades at about 2.5x book value. A price-to-book that high embeds a demand: the bank has to keep earning a return on equity beyond the elite tier that few banks defend for long, and to hold it there for decades. On a trailing, year-end-book basis it has earned around 13.1%, a shade below the mid-teens return the bank highlights on its own adjusted quarterly basis, and the distance between those two bases is itself worth keeping in mind.
The methods used to triangulate the price do not agree, and the disagreement is the finding. The price sits about 1.3x above where the asset value methods land (excess return and book value plus profitability), and roughly at the level the earnings power methods support, so on trailing capital it is full but not extreme. The peer multiple methods actually reach above today's price, at about 0.7x, because CIBC trades near a price-to-earnings ratio of 16 against a crude sector reference around 10, and its recent earnings growth flatters the growth-adjusted screens. Only the cash-flow methods sit well below the price, which stands about 1.6x above where they land. Read together, this is a value and asset-supported name whose trailing earnings power carries the price, not a pure growth bet, with the whole weight resting on how durable that return proves.
For a bank the balance-sheet question is capital and payout, not net debt or cash burn, and here CIBC is comfortable. It paid about $3.00 billion in dividends over the trailing year against $6.90 billion of net income, a payout near 43%, and it holds a common equity tier one ratio of 13.6% with room to keep buying back stock. The Caribbean divestiture adds a little more capital headroom on top. So the downside is bounded by a well-capitalized balance sheet; what the price actually poses is a durability question, whether a mid-teens return on a Canada-heavy loan book survives a housing cycle that is already nudging impaired mortgages higher.
Catalysts
CIBC reported its fiscal second quarter, ended April 30, on May 28, 2026: net income of $2,465 million, up 23% year over year, on revenue of $8,006 million, up 14%, with adjusted diluted earnings per share of $2.54, up 24% and the eighth consecutive quarter of double-digit growth. Reported return on equity rose 250 basis points to 16.4%, net interest margin improved to 1.67%, and the common equity tier one ratio held at 13.6% even after the bank repurchased 6.5 million shares in the quarter.
Two items reshape the near-term picture. CIBC agreed to sell its 91.67% interest in CIBC Caribbean for about US$1.645 billion in cash and shares, a deal expected to lift the capital ratio by 24 basis points but to carry a roughly $350 million charge landing in the third quarter. On the sell side, Scotiabank moved the stock to sector perform from outperform after the quarter, citing growth concerns as the earnings comparisons get harder.
The next event is third-quarter fiscal 2026, for the quarter ended July 31, due in late August. Two things carry the print: the provision for credit losses and mortgage impaired-loan formation, which will show whether the renewal-wall softness is turning into actual losses, and the one-time Caribbean charge, which will depress the headline that quarter without touching the underlying run rate. Provisions ran at $568 million in the first quarter, and management has signaled it expects the pace to moderate slightly through the back half of the year.
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
CIBC Q2 2026 earnings materials, May 28, 2026 · CIBC Q2 2026 earnings release, May 28, 2026 · Scotiabank analyst note, June 2026 · JPMorgan FY2025 10-K · peer FY2025 10-K disclosures · CIBC Q1 2026 earnings materials, February 2026