The ANZ share price has gone up 23% since the start of 2021. Is it a buy today?
The post Is the ANZ (ASX:ANZ) share price a buy right now? appeared first on The Motley Fool Australia. –
The Australia and New Zealand Banking Group Ltd (ASX: ANZ) share price has risen 23% in the calendar year to date. It has risen 55% over the last 12 months.
But that’s old news. It hasn’t actually done much in the last few months. It is virtually flat since early March 2021.
However, just because ANZ shares haven’t done much doesn’t mean that analysts think it’s a sell (or buy, either).
So what do analysts think?
Mixed views on the ANZ share price
One view is Citi’s, it thinks ANZ shares are a sell with a price target of $28. It thinks that ANZ’s core profit is going to be weaker and it has only been ‘markets’ that have helped keep revenue as high as it is.
Credit Suisse is another broker that believes that ANZ shares aren’t a buy. Though it doesn’t go as far as calling it a sell – it’s neutral on the business. However, it also noted the markets earnings were likely to be hurting because of the current conditions.
What has the market been told recently?
The latest material update out of the big four ASX bank has been its capital management update.
ANZ’s board decided that the bank would buy back up to $1.5 billion of ANZ shares on-market as part of its capital management plan.
The bank’s reported level 2 common equity tier 1 capital (CET1) ratio at 31 March 2021 was 12.4%, which was materially above APRA’s stated ‘unquestionably strong’ capital requirement of 10.5%.
This on-market buy-back is expected to reduce ANZ’s March 2021 CET1 ratio by approximately 35 basis points.
At the time, ANZ CEO Shayne Elliot said:
After taking into consideration the ongoing pressures in some parts of the economy due to COVID, including the current lockdowns in parts of the country, the strength of our balance sheet and ongoing financial performance means we are in a position to return a modest amount of surplus capital to shareholders through a buy-back of shares on-market.
Just as we supported our customers through previous lockdowns we stand ready and able to provide assistance to those that need it. The strength of our business means we are well placed to fulfil needs of our customers and the broader community while still actively managing our capital.
Since 19 July 2021, the ANZ share price has risen by 4%.
Prior to that, ANZ reported its FY21 first half result. The major bank revealed that its statutory profit after tax had risen by 45% to $2.94 billion compared to the second half of FY20. Continuing operations cash profit was up 28% to $2.99 billion.
In that result, ANZ’s board also decided to double its dividend from $0.35 per share to $0.70 per share.
However, the HY21 report was heavily influenced by a total provision release of $491 million. Profit before credit impairment and tax was actually down 10% to $3.94 billion.
What is the ANZ share price valuation?
Credit Suisse reckons ANZ shares are valued at 13x FY21’s estimated earnings with a projected grossed-up dividend yield of 7%.
Citi has a lower earnings projection for FY21. It thinks the ANZ share price is valued at 14x FY21’s estimated earnings, but also with a grossed-up dividend yield of around 7%.
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Here’s what has been moving the ANZ (ASX:ANZ) share price in August 2021
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.