We did just talk about Toronto-Dominion Bank’s (TSE:TD) planned sale of its stake in Charles Schwab (SCHW) yesterday, but a new development has arrived that proves an unexpected win for the Canadian banking giant. It turns out that TD Bank will end up with more than originally expected for the Schwab sale, and that gave shares a further fractional boost in Tuesday morning’s trading.
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Originally, TD Bank looked to raise just south of $14 billion for selling off its shares of Schwab, obtained back when TD Bank sold TD Ameritrade to Schwab. But the sale will be more lucrative than expected, as TD Bank revealed it would be selling Schwab shares at $79.25 each. That represents roughly 19 times expected earnings per share, and also a surprising discount over current share prices, about $83.60 as of this writing. That, reports noted, would put TD Bank’s take at close to $20 billion.
TD Bank also revealed a point that may not be quite so exciting for investors. It would not be putting the whole sale price into a share buyback plan. Rather, only about $8 billion will go into buybacks. The remaining cash would be used as investment in the business itself.
An Uncertain Invoice
It does stand to reason there is a certain amount of wiggle room involved in the final number of the Schwab sale. After all, stock prices can change several times in a matter of seconds; trying to pin down an exact amount from one day to another is next to impossible. But just how much money TD Bank will get for its sale of Schwab has already shifted more than once.
The original reports, we noted, were looking at just short of $14 billion. A report slightly later noted the amount was closer to $14.6 billion. A subsequent update to that report boosted the amount to $15.4 billion, which was assented by a different report elsewhere. Though some of those reports were based on the last closing price, which has, of course, changed since yesterday. So we likely will not know just how much TD Bank will walk away with until the check, so to speak, is in hand.
Is TD a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TSE:TD stock based on five Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 14.37% rally in its share price over the past year, the average TSE:TD price target of C$86.20 per share implies 0.54% downside risk.
