Investing in Laurentian Bank Stock

Updated: June 20, 2025

Bank stocks are often seen as a safe and steady choice for long-term investors. In Canada, they are especially popular because the country’s banking system is known for being strong and reliable. These stocks can offer stable dividends and tend to hold up well even during economic ups and downs. That’s why many investors continue to include Canadian bank stocks—like Laurentian Bank’s—in their portfolios.

In this article, Wealth Professional Canada will discuss what you need to know about Laurentian Bank of Canada stock. We’ll compare key financial indicators to see if this bank stock is viable for investment. Want to help your clients decide whether buying Laurentian Bank stock is a good buy? Read on for more.

Is Laurentian Bank stock a good buy?

The most important question is whether Laurentian Bank of Canada stock is worth your clients' time and money. At first glance, its fundamentals appear to be solid. However, reports point out some uncertainties.

For instance, in mid-2023, Toronto-Dominion Bank and Scotiabank were considering buying Laurentian Bank. But both banks walked away after a strategic review created uncertainty around the sale and reduced the chance of a bidding war.

The withdrawal of potential buyers like TD Bank and Scotiabank has reduced the likelihood of a sale, impacting the stock's performance. Analysts suggest that the stock may experience a gradual decline until the bank provides clarity on its strategic direction.

Should investors buy, wait, or avoid?

For those thinking about buying, it might be wise to wait. The bank's growth prospects are uncertain, and other Canadian banks might offer better returns. Waiting could help investors avoid potential losses and provide opportunities to invest in more stable or profitable stocks.

Check out this video that talks about the strategic review that made potential buyers back out. The presenters explain how, more than a year ago, Scotiabank wanted to grow in Québec and TD had extra funds to spend. But after the review, both banks decided not to move forward:

After the failed sale, Laurentian Bank announced CEO Rania Llewellyn’s resignation, further plunging Laurentian Bank stock. Laurentian has since hired three independent directors to focus on improving the bank’s performance.

What to consider before investing in Laurentian Bank stock

Before buying Laurentian Bank stock or any other investment for that matter, here are a few things that your clients must keep in mind:

1. think of the gains without ignoring the risks
2. understand your investment

3. don't put your eggs in one basket

Let's take a closer look at each:

1. Think of the gains without ignoring the risks

Laurentian Bank of Canada stock looks undervalued based on its current price. Figures show how much the stock has dropped in recent months. Even though some investors might see this as a buying opportunity, the risks are hard to ignore.

While the stock still offers decent dividends, it might not be the best pick for those looking for stable growth. Your clients should weigh the potential rewards against the ongoing risks before deciding whether to invest or not.

2. Understand the investment

The bank recently faced major changes, including a CEO resignation and missed opportunities for acquisition. These shifts make it harder to predict how well the bank will perform in the near future.

It’s best to stay up to date on the company’s financials and wait for stronger signs of recovery before advising your clients to invest.

3. Always diversify investments

Your clients shouldn’t limit their investments or portfolios to one bank stock or one type of stock alone. Tell them to mix it up with energy stocks and tech stocks. You can also advise them to diversify their investment portfolio with other asset classes like ETFs, mutual funds, REITs, etc.

This can protect against the effects of inflation and make up for any loss or underperforming investments. To know more about diversification, watch this video:

Indicators of a viable bank stock for investment

Before buying Laurentian Bank stock (or any stock for that matter), it’s vital for your clients to consider these six key indicators first:

1. market capitalization
2. price to earnings (P/E) ratio
3. price to book (P/B) value ratio
4. earnings per share (EPS)
5. dividend payout ratio (DPR)
6. dividend yield

Let's discuss them further below:

1. Market capitalization

This is the total value of a company’s shares. The market cap can inform investors of a company’s growth potential. This key indicator can also provide a glimpse into the company’s standing in its respective industry, as well as how it fares against its rivals.

This number can be computed via this formula:

2. Price to earnings (P/E) ratio

This is the ratio that determines whether the company’s stock price is higher or lower compared to the company’s revenues. To find this ratio, this is the formula:

3. Price to book (P/B) value ratio

This ratio compares the current market cap of a company with its accounting value. If a bank or other type of company has a low P/B ratio, this is an indicator of a good stock. This means investors would be paying less for the actual book value of the stock.

Here’s how to compute the P/B ratio:

4. Earnings per share (EPS)

As the name implies, EPS tells investors how much money a company earns for each share of stock. Experienced Wall Street analysts often refer to EPS as a reliable measure of a company’s value.

5. Dividend payout ratio (DPR)

This indicates how much a company pays out to investors in terms of dividends compared to the stock’s earnings. The DPR can be a reliable indicator of a company’s earnings and how well it can cover dividends. To get the DPR, use this formula:

6. Dividend yield

Finally, this is another financial ratio that tells investors the percentage of a company's share price that it pays in dividends each year. As an example, let’s say a bank has a share price of $20 and pays a dividend of $1 per year. That would make its dividend yield 5 percent.

The formula used to calculate the dividend yield is:

A look back at Laurentian Bank’s history

Laurentian Bank of Canada (TSX ticker code: LB) was founded in 1846 by Monsignor Ignace Bourget, the second Bishop of Montreal, and at least 15 other prominent businessmen.

As the bank was established in French-speaking Québec, its original name was Banque d'Épargne de la Cité et du District de Montréal, or Montreal City and District Savings Bank.

Here are some milestones in Laurentian Bank's history:

• 1846: achieved a customer base of 11,000 and $3 million in deposits within 25 years, transitioning to a share capital limited company with a federal charter. The headquarters were established at 262 Rue Saint-Jacques, Montréal
• 1921: celebrated its 75th anniversary, amassing assets of $49 million
• 1939: became the first to incorporate a trust company, establishing the Montréal City and District Trustees, later Laurentian Trust
• 1965: listed its shares of stock on the Montréal Stock Exchange
• 1974-1976: introduced the Bancaide ATM system and reached over $1 billion in assets
• 1983: debuted stock on the Toronto Stock Exchange
• 2000: expanded its services by acquiring Sun Life Trust Company, forming B2B Bank
• 2016: consolidated its Montréal offices to a new location at 1360 Rene Levesque Boulevard West

Indeed, Laurentian Bank’s history and present standing as Canada’s ninth largest bank might be impressive. However, these should not be taken as the only signs that Laurentian Bank stock is a great investment. Other key indicators must be considered to determine if investing in this stock is viable.

Investing in Laurentian Bank stock: Is it worth the risk?

Laurentian Bank has a strong history, from its founding in 1846 to its position today as Canada’s ninth-largest bank. However, recent developments have created some uncertainty. While this stock might appear undervalued and continue to offer dividends, the lack of a clear growth direction makes it a less attractive option for now.

That’s why you should remind your clients that investing always comes with risks. Before buying Laurentian Bank stock, tell them to consider the full picture. It might be smarter to wait for more stability or to explore other Canadian banks with stronger momentum.

You can check out this guide if your clients would like to invest in other Canadian bank stocks with better growth and returns.