Don’t buy CBA shares until this happens

It hasn’t been a good period to have owned Commonwealth Bank of Australia (ASX: CBA) shares over the past six or seven months. Back in the middle of last year, CBA stock was riding high, having hit a new all-time record of $192 a share in late June. But since then, it has been nothing but bad news for this ASX 200 bank stock.

Since the June 2025 high, CBA shares have fallen by around 18%, going off the $156.96 share price we see on Wednesday (at the time of writing). The falls were even more painful (approaching 25%) when the bank got near $147 a share last month.

With a drop of this magnitude, many investors might be feeling tempted to ‘buy the dip’ on CBA. After all, this is one of the most popular stocks on the ASX, one that delivered a roughly 40% gain in 2024. Further, CBA is unquestionably one of the best-run businesses in Australia, commanding a clear market lead in Australian banking and financial services and enjoying phenomenal brand loyalty.

However, I would posit that investors anxious to get their hands on CBA shares at these lower prices should hold off for a few days. That’s because CBA is scheduled to report its latest earnings next week on 11 February.

Should investors wait until earnings before buying CBA shares?

Most ASX shares are required to report their latest financial results every six months. CBA is no different, and is taking its traditional place as one of the first companies off the line to deliver its results to shareholders for this February’s earnings season.

It’s particularly important for CBA this time around, given the meaningful share price correction it has just suffered. However, as we discussed this week, CBA is still trading at a relatively elevated valuation, whether measured by the price-to-earnings (P/E) or price-to-book (P/B) ratios, compared to both other ASX banks and banks around the world.

It’s common for companies that the market judges as offering above-average quality to trade at lofty valuations. But, at the end of the day, investors will still want to see some decent growth to justify their investments.

This time last year, CBA delivered some numbers that didn’t exactly set the world on fire. For the bank’s half-year to 31 December 2024, CBA reported a 3% rise in operating income, a 2% increase in cash net profits after tax and a 2.3% improvement in cash earnings per share.

If CBA reports numbers that look like that next week, I think investors will start to wonder why they are paying a P/E ratio of almost 26 and a book ratio of over 3.

I’d certainly want to know what CBA managed to bring in over the second half of last year before committing to an investment with those kinds of valuations.

The post Don’t buy CBA shares until this happens appeared first on The Motley Fool Australia.

More reading

• What should you do with your CBA shares in 2026?
• 3 ASX dividend stocks I’m excited to see the payouts of this reporting season
• 10 most traded ASX shares among 1 million Aussie investors last year
• ASX small-caps could be where the next wave of returns comes from
• What happened with the big four ASX 200 bank stocks like ANZ and CBA shares in January?

Motley Fool contributor Sebastian Bowen 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 Scott Phillips.