Which ASX 200 bank share is the cheapest on a P/E basis after earnings? Could it be Commonwealth Bank of Australia (ASX: CBA)?
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The ASX banks have been in the news a lot over the past couple of weeks. Like a lot. For starters, the S&P/ASX 200 Index (ASX: XJO) made a new all-time high this week. And seeing as the big four ASX banks dominate the largest weighted shares in the ASX 200, this has drawn interest (pardon the pun).
But perhaps the biggest reason why all eyes have been on the banks is good old fashioned earnings. 西太银行 (ASX: WBC), Australia and New Zealand Banking GrpLtd (ASX: ANZ) and 澳大利亚国家银行 (ASX: NAB) have all reported half-year earnings in the past fortnight. And just today, 银行及金融 - 澳洲联邦银行 (ASX: CBA) has delivered a quarterly update.
Since this was a chance to see how the banks are all bouncing back from the turmoil of last year, it was something of a watershed moment for the big four. And overall, investors seem to be impressed. That’s going off how bank share price appreciation was a large driver of the ASX 200 reaching its new record high.
But this gives us a good chance to take stock of the banks today. ASX shares, especially blue chip shares like the banks, are usually valued by the price-to-earnings (P/E) ratio metric. The P/E ratio is especially useful in comparing businesses that compete in the same sector too. And the banks have given us new ‘Es’ with their recent earnings reports. As such, it’s a good time to check out these new valuations. Before we start, it’s worth mentioning that the iShares Core S&P/ASX 200 ETF (ASX: IOZ) has the average P/E ratio of ASX 200 shares at 23.87 right now.
ASX bank shares get new P/Es
So, let’s begin with Commonwealth Bank. CBA currently has a P/E ratio of 21.08 with a share price (at the time of writing) of $94.79.
Westpac is sitting on 21.93 with a share price of $25.63.
ANZ is on a P/E of 16.22 at a price of $26.78.
And NAB is offering a P/E ratio of 20.28 at a share price of $26.43.
Ok, so on a pure earnings basis, Westpac is the most expensive bank, followed closely by CBA. Then we have NAB, and ANZ in last place by quite a distance. This tells us that the market is viewing ANZ in a less favourable light than the other banks, all other things being equal.
But that also means that ANZ is currently offering the largest dividend yield of the big four today, with 3.92% on the table at the current share price. I’ll leave you with that.
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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. 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.
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