Buffett Brain · Research note
Score updated 23 Oct 2026 · analysis from 2 Jun 2026
TD· Financial Services
The Toronto-Dominion Bank
Toronto-Dominion is a big Canadian bank earning a feeble 0.72 percent return on capital while priced at nearly 18 times earnings.
Buffett fit
Weak fit
Owner
33
Durability
71
Management
27
Price
35
Score updated 23 Oct 2026 · analysis from 2 Jun 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Financial Services stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned all of Toronto-Dominion outright, I would be unhappy watching it earn 0.72 percent on the capital I put to work, against a five-year figure of only 2.2 percent.
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The franchise itself is durable. People do not move their checking accounts often, and that stickiness shows up as a respectable durability reading of 71.
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Management earns a 27 here and the numbers explain why. came in negative relative to net income, with a fcf-to-net-income ratio of minus 3.50, and interest coverage of 0.38 is alarming for a lender.
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There is no here. The owner-earnings yield is negative at minus 27 percent, so I am being asked to pay up for cash the business is not currently producing for owners, and the trailing of 17.6 is a full price for a bank earning 0.72 percent on capital.
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For and against
The strongest points on each side, with the numbers behind them.
In its favor
6- 1Deposit franchise is sticky, reflected in a solid durability score of 71 and customers who rarely switch banks.
- 2Revenue has compounded at 24.8 percent, showing the top line is still growing.
- 3Earnings per share have grown at 10.6 percent over the measured period despite the recent profit squeeze.
- 4Share count has shrunk about 1.4 percent a year, so management is at least not diluting owners.
Concerns
7- 1Valuation is unforgiving: a trailing of 17.6 and EV-to- of 22.1 is a full price for a bank, and the valuation score of 35 says you are overpaying.
- 2Owner-earnings yield is negative at minus 27 percent, meaning the business is not generating cash for owners at this price.
- 3 is just 0.72 percent over the trailing year, and only 2.2 percent over five years, which is feeble for any business.
- 4Financial health scores a flat 0, the worst possible reading, driven by the metrics below.
Price history
$125+72.6%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Toronto-Dominion makes its money the way banks always have, by taking in deposits cheaply and lending them back out at a higher rate, then layering on wealth management and a large U.S. retail franchise. Reported sits at about 16.5 percent and revenue has grown at a 24.8 percent clip, but a bank's headline margins tell you very little until you see what the loans actually return. What matters here is that the is only 0.72 percent over the trailing year, which says the lending engine is barely earning its keep.
How this analysis has moved
The call has held across 5 reviews.
Sep 27, 2026 → Oct 23, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
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Questions about The Toronto-Dominion Bank
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