Taking IOI: The Toronto-Dominion Bank AUD benchmark 5Y fixed/FRN

Taking IOI: The Toronto-Dominion Bank AUD benchmark 5Y fixed/FRN

Toronto-Dominion Bank (TD) has recently been in the spotlight for its financial performance and strategic moves. The bank's latest earnings report has seen an increase in its earnings per share (EPS) estimate for the fiscal year 2025. This article delves into the specifics of the bank's performance, focusing particularly on its AUD benchmark 5Y fixed/FRN (foreign currency risk management).

Financial Performance and Earnings Estimates

National Bank Financial has increased its EPS estimate for TD for the fiscal year 2025 to $5.88, slightly above the previous forecast of $5.85 and the current consensus estimate of $5.48 [1]. This upward revision reflects the bank's strong performance in the recent quarter, where it reported $1.91 EPS, outperforming the consensus estimate of $1.46.

Historical analysis reveals that TD has consistently beaten earnings expectations, with five such instances recorded over the past year. However, the market's response has been mixed: while the 3-day win rate following an earnings beat is relatively strong at 40%, this fades to 20% over 10 days and drops to 0% by 30 days. Notably, the average returns post-beat have been negative (-0.46% in 3 days, -4.29% in 10 days), suggesting that while earnings surprises may generate short-term optimism, they have not translated into sustained outperformance. This pattern underscores the importance of evaluating broader fundamentals beyond quarterly results.

Dividend Increase

In addition to its improved earnings outlook, TD has also announced a significant increase in its quarterly dividend. The new dividend stands at $1.05 per share, up from $0.76, translating to an annualized dividend yield of 5.6%. This move is a positive signal for investors, indicating the bank's confidence in its financial health and future prospects [1].

Analyst Ratings and Price Targets

The stock has received varied analyst ratings, with three analysts rating it as a "Buy," four as a "Hold," and one as a "Sell." The consensus price target is $93.00, with an average rating of "Hold" [1]. These ratings reflect a cautious but generally optimistic view of the bank's future performance.

Market Performance

As of September 1, 2025, TD's stock has been performing well, with a market cap of $128.73 billion and a P/E ratio of 8.77. The stock has a debt-to-equity ratio of 0.09, a current ratio of 1.02, and a quick ratio of 1.02, indicating a strong balance sheet. The stock has a 50-day moving average of $73.79 and a 200-day moving average of $66.59, suggesting a steady upward trend [1].

Institutional Investor Activity

Institutional investors have been actively participating in TD's stock. Oppenheimer & Co. Inc., for instance, increased its stake by 144.6% during the first quarter, owning 11,532 shares worth $691,000. Other major investors, such as BRITISH COLUMBIA INVESTMENT MANAGEMENT Corp and Bank of New York Mellon Corp, also significantly increased their stakes [1].

Conclusion

Toronto-Dominion Bank's recent performance and strategic moves, including the upward revision of its EPS estimate and the increase in its dividend, are positive indicators for investors. The bank's strong financial health and steady stock performance make it a compelling option for those seeking a stable investment in the financial sector. However, historical patterns suggest that while earnings beats are frequent, their impact on stock price momentum has been limited, reinforcing the need for a balanced approach to valuation and risk management.

References
[1] https://www.marketbeat.com/instant-alerts/national-bank-financial-forecasts-td-fy2025-earnings-2025-09-01/