CBA share price: is the bank a buy heading into its H1 results?
Before the Commonwealth Bank of Australia releases its half-year results, we examine how analysts currently view the stock.
Key dates for CBA investors
The Commonwealth Bank of Australia (ASX: CBA) is set to release its first-half, FY20 financial results on 12 February.
The bank’s interim dividend date is currently set for 19 February; with CBA set to pay this dividend on 31 March.
The company has a current dividend yield of 5.18% and most recently paid a 231 cents per share dividend.
CBA share price: a stretched valuation
CBA is currently Australia’s largest publicly listed company, boasting a market capitalisation of ~$148 billion.
It also remains Australia’s most expensive bank – from a valuation perspective.
Surveying the big four's current price-to-earnings (PE) ratios: on a one-year forward basis, we see that CBA is the most expensive of the banks, trading at a forward PE of 17.2x. Looking at the other members of the big four, we see that Westpac currently trades at 13.6x, National Bank of Australia at 12.5x and ANZ at 12.2x, according to Morgan Stanley.
Investors have taken little heed of such matters, it would seem. In the last twelve months CBA has been the best performing of the big four, with its stock rising ~13% in that period.
The CBA share price currently trades at $84.29 per share – up around 1%, as the ASX 200 flirts with all-time-highs.
Do you own any of the big four banks? You can hedge your downside risk by trading CFDs now.
The analyst view: a bearish take
Besides potential valuation issues, analysts are on average, bearish on CBA’s prospects as we head into the bank’s half-year results.
As it stands, no analyst rates CBA a buy, while six rate it a hold and 10 rate it a sell. The average 12-month price on CBA is $75.30 per share, according to Bloomberg data.
At current levels, such a price target would imply downside of ~10.5%, should analysts be proven correct.
Bell Potter is the most bullish broker, assigning the bank a price target of $86.00 per share.
By comparison, Evans & Partners is the most bearish, with a negative recommendation and a price target of just $65.00 per share. At current price levels that price target would imply downside potential of a little more than 20%.
Other issues facing the big four – including CBA – and identified by Macquarie Wealth Management include margin and fee headwinds, the persistence of regulatory issues, a changing and ever-increasing competitive landscape and a historically weak credit growth outlook.
Ready to start hedging? Open an account with IG today to get started.
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Act on stock opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Try a risk-free trade
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take advantage while conditions prevail.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
