Thinking about what to do with Canadian Imperial Bank of Commerce stock right now? You are definitely not alone. With the shares most recently closing at $111.82, investors are watching every tick and wondering whether we are at the start of something bigger or facing a change in the narrative. In the past week, CIBC’s stock edged down by 1.6%. Looking at a wider timeframe, there is a striking upward trend: up 2.0% in the last month, 23.7% year-to-date, and an impressive 38.9% over the past year. For those with a long-term lens, the gains appear even more remarkable, with the stock climbing 125.6% in three years and 183.8% over the last five years.

Much of this momentum has been fueled by broader market optimism and a shift in how investors are weighing risk across Canada’s financial sector. Some market watchers are betting on continued growth, while others are questioning whether these levels are justified, especially as the economic landscape shifts.

For valuation-focused investors, CIBC earns a value score of 4 out of 6. This indicates it is currently undervalued in four of the six core valuation checks analysts use to gauge whether a stock is a bargain or overhyped.

So, how do we break down those numbers and figure out where CIBC really stands? In the next sections, we will walk through each major valuation method one by one. Stay tuned, because there is an even more insightful way to judge whether CIBC is truly priced right, and we will get there by the end of this article.

Canadian Imperial Bank of Commerce delivered 38.9% returns over the last year. See how this stacks up to the rest of the Banks industry.

The Excess Returns valuation model focuses on how much profit a company can generate from its invested capital once the cost of equity is considered. Instead of projecting future cash flows, this approach examines the company's ability to earn more than its required return. This can highlight long-term value creation that may not be immediately visible from surface-level metrics.

For Canadian Imperial Bank of Commerce, the data is compelling. The company's current Book Value is CA$65.52 per share, with a Stable Book Value of CA$64.96 per share, based on estimates from nine analysts. Earnings power is also robust, with a Stable EPS of CA$9.37 per share, calculated from return on equity forecasts by ten analysts. The average Return on Equity is 14.43%. After accounting for a Cost of Equity of CA$4.72 per share, the Excess Return is CA$4.65 per share.

Applying this methodology results in an estimated intrinsic value of CA$164.52 per share, which is about 32% higher than the current market price. This significant gap indicates that the stock is notably undervalued according to the Excess Returns model.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Canadian Imperial Bank of Commerce.

Our Excess Returns analysis suggests Canadian Imperial Bank of Commerce is undervalued by 32.0%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

The price-to-earnings (PE) ratio is a time-tested valuation tool and is particularly effective for profitable companies like Canadian Imperial Bank of Commerce. The PE ratio compares a company’s current share price to its per-share earnings, helping investors gauge how much the market is willing to pay for each dollar of profit. Generally, higher growth prospects or lower perceived risks support a higher PE, while slower growth or greater uncertainty lead to a lower "normal" or "fair" PE ratio for a business.

At present, CIBC trades on a PE of 13.3x. That puts it slightly below the average PE of its peers (14.2x) and above the broader banks industry average, which is 10.3x. While industry and peer group comparisons can provide context, they do not fully account for factors like CIBC’s specific risk profile, growth outlook, and market position.

This is where Simply Wall St’s proprietary Fair Ratio comes in. This metric considers unique factors such as the company’s forecast earnings growth, profit margins, industry characteristics, risks, and market cap, providing a more tailored benchmark for valuation than a simple industry or peer comparison. For CIBC, the Fair Ratio stands at 13.4x. With its actual PE of 13.3x almost exactly matching this Fair Ratio, the valuation looks very much in line with expectations given all relevant factors.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier, we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple and approachable way for investors to capture their perspective on a company, telling the story behind their numbers, including assumptions about future revenue, earnings, and margins. Rather than relying solely on ratios or single-point forecasts, Narratives link what’s happening in CIBC’s business and industry (like digital adoption or U.S. market expansion) to a clear financial forecast and an estimated fair value.

Available on Simply Wall St’s Community page, Narratives are easy to create and update, and millions of investors use them to track their thinking and learn from others. Narratives allow you to compare your estimated fair value with the current price, giving concrete guidance on whether to buy, sell, or hold. In addition, Narratives are dynamic, as they automatically update as new announcements, news, or earnings reports come in, so your investment thesis always stays relevant.

For example, one investor’s Narrative might focus on rapid digital innovation and U.S. growth, arriving at a bullish fair value above CA$118 per share. Another may emphasize mortgage risk and regulatory costs, resulting in a much lower target near CA$78. Whichever side you take, Narratives help you make informed, timely decisions tailored to your own view of CIBC’s future.

Do you think there's more to the story for Canadian Imperial Bank of Commerce? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CM.TO.

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