Category: Stock Market

Do you have some room in your investment portfolio for a couple of ASX 200 blue chip shares?

If you do, then it could be worth considering the two blue chips listed below that have been named as best ideas by analysts at Morgans.

Here’s what the broker is saying about these high-quality companies right now:

Flight Centre Travel Group Ltd (ASX: FLT)

The first ASX 200 blue chip share that Morgans has named as a buy is Flight Centre.

It is one of the world’s largest travel groups with a vast leisure and corporate travel sales network that extends throughout four major regions. These are Australia and New Zealand, The Americas, EMEA, and Asia.

Morgans believes that it would be a great option for investors right now. Particularly given its compelling risk/reward profile. It explains:

FLT has the greatest risk, reward profile of our travel stocks under coverage. The risk is centred around execution given its changed business model, while the reward is material if FLT delivers on its 2% margin target. If achieved, this would result in material upside to consensus estimates and valuations. FLT is targeting to achieve this margin in FY25. With greater confidence in the travel recovery and the benefits of Flight Centre’s transformed business model already emerging, we think the company is well placed over coming years.

Morgans has an add rating and $27.27 price target on the company’s shares.

Washington H Soul Pattinson & Company Ltd (ASX: SOL)

Another ASX 200 blue chip share that could be a buy according to Morgans is Soul Patts. It is an investment company with a diversified portfolio of assets across a range of industries.

Morgans is very positive on the company’s investments and highlights its long track record of outperforming the market. It said:

SOL’s investment portfolio includes a diversified pool of assets ranging from listed equities (both large cap and emerging companies), private equity, property and structured yield. On a 20-year horizon, SOL’s annualised TSR is 12.5% vs the All Ords accumulation index of 9%. SOL has a 20-year history of increased dividend distributions, with a 20-year CAGR of c.8%. In our view, SOL’s management team continues to deliver both organic and inorganic growth over the long term. We continue to like the SOL story, particularly its track record of growing distributions.

The broker has an add rating and $35.60 price target on the company’s shares.

The post 2 of the best ASX 200 blue chip shares that money can buy appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

More reading

• Why Cettire, Lendlease, Neuren, and Sayona Mining shares are racing higher today
• Guess which ASX 200 healthcare share just rocketed 11% on ‘groundbreaking trial’
• Lendlease share price leaps 9% on plans to bring $4.5 billion back home
• 5 things to watch on the ASX 200 on Monday
• These are the 10 most shorted ASX shares

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 positions in and has recommended Idp Education. The Motley Fool Australia has recommended Bapcor and Idp Education. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

By now, all Australians would be aware of the woes that high inflation has brought upon us. After virtually disappearing as an economic concern for a decade, the post-pandemic era saw inflation rear its ugly head once more. This could have serious consequences for a generation of Australians’ retirement dreams.

The Australian economy has been suffering from some of the worst rates of inflation we’ve seen since the turn of the century since 2021. This has seen the price of almost everything rise at a rate that many Australians have never experienced.

Inflation can also be thought of as the erosion of the value of our currency. As inflation rages, the cost of everything priced in Australian dollars rises as the real value of the currency falls. This makes financial management of all aspects of life, including retirement planning, more difficult. If someone’s wages or salary doesn’t increase by at least the rate of inflation, that person’s living standards will fall.

New data from Commonwealth Bank of Australia reveals that the high inflation environment we’ve all been enduring over the past few years is hitting younger people harder than older people.

According to the CBA report, Australians of retirement age (aged over 65) don’t seem to be feeling the pains of inflation, with this age group spending above the rate of inflation over the first three months of 2024. But in stark contrast, Australians aged between 25 and 29 reduced their spending by 3.5% over the three months to 31 March compared to the same period in 2023.

This trend could have a severe impact on the retirement savings of young Australians.

Inflation eats into younger Australians’ retirement dreams

Most Australians invest with the goal of building wealth, achieving financial independence and perhaps even an early retirement.

The powers of compound interest become more potent the longer someone invests in wealth-producing assets like ASX shares. As such, getting started with investing as early as possible is essential for maximising one’s investing returns (and retirement comfort) over a lifetime.

Here’s how Visual Capitalist recently put it:

Though you should only invest money that you don’t need access to in the short term, the reality is that waiting will have consequences on your long-term gains.

For example, let’s say you started investing at 20 years old, and you invest $250 each month with an 8% annual rate of return. By the time you reach 65, over 50% of your total portfolio would have come from money that you invested in your 20s.

Someone who invests a decade later than their peer with double the amount will actually see lower returns in the long run.

By this logic, the current inflation crisis could be doing enormous damage to younger Australians’ retirement prospects.

If Australians aged between 25 and 29 are cutting their spending, we can probably assume that they are struggling to put the same money aside to invest for retirement as they might once have done as well.

So if you’re a younger Australian struggling to invest at the same rate you were in, say, 2021, right now, this is very much worth keeping in mind. It can be devilishly difficult to scrape together enough money to invest in your retirement in 2024. But this is a timely reminder that every little bit helps.

The post Why inflation could cost young investors 50% of their retirement savings appeared first on The Motley Fool Australia.

More reading

• Leading brokers name 3 ASX shares to buy today
• Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings
• Why Cettire, Lendlease, Neuren, and Sayona Mining shares are racing higher today
• Why Genetic Signatures, Retail Food Group, Smartpay, and St Barbara shares are tumbling today
• These 3 ASX All Ords stocks turned $500 into at least $16,500 in less than a decade!

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.

With so many shares to choose from on the Australian share market, it can be difficult to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Brambles Ltd (ASX: BXB)

According to a note out of UBS, its analysts have retained their buy rating and $17.30 price target on this logistics solutions company’s shares. The broker highlights that Brambles has been having a reasonably underwhelming year with mixed performances being seen across regions. However, UBS is expecting things to pick up in the final quarter of FY 2024, which it believes could support a re-rating of Brambles’ shares to higher multiples. So, with its shares trading at a deep discount to industrials peers, the broker thinks that now is an opportune time for investors to snap them up. The Brambles share price is trading at $14.49 on Monday afternoon.

Coles Group Ltd (ASX: COL)

A note out of Citi reveals that its analysts have retained their buy rating and $19.00 price target on this supermarket giant’s shares. The broker has been busy making in store visits to get a better idea of how the big two supermarket operators are performing with their respective strategies. The good news for Coles’ shareholders is that Citi believes that its pricing strategy is leading the way and will result in stronger sales growth during the fourth quarter of FY 2024. This is based on its belief that Coles’ strategy is being executed better and has a stronger value perception. And while the broker likes both supermarket giants at current levels, its preference at this point is Coles. The Coles share price is fetching $16.32 on Monday.

Collins Foods Ltd (ASX: CKF)

Analysts at Morgans have retained their add rating on this quick service restaurant operator’s shares with a trimmed price target of $11.50. The broker has been busy looking over recent updates from peers. Unfortunately, these updates demonstrated moderating sales in the Australian market during the first half of 2024. In light of this, the broker has trimmed its earnings estimates ahead of the company’s full year results release next month. Nevertheless, Morgans believes that the KFC restaurant operator’s shares have been oversold and that this has created a buying opportunity for investors. The Collins Foods share price is trading at $9.48 at the time of writing.

The post Leading brokers name 3 ASX shares to buy today appeared first on The Motley Fool Australia.

More reading

• Analysts say these 4 ASX dividend shares are buys
• Should you buy Coles shares for that hefty 6% dividend yield?
• 4 super ASX 200 blue chip shares to buy
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• Here’s the Coles share price I would buy at

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has positions in Collins Foods. 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 positions in and has recommended Coles Group. The Motley Fool Australia has recommended Collins Foods. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

As most Australians (and all mortgage holders) would know, interest rates have been on a steep upward trajectory over the past two years. This has made paying the mortgage a whole lot harder, but conversely made it easier to make more money from cash investments.

Back in April of 2022, the Reserve Bank of Australia (RBA) still had the cash rate at a record low of 0.1%. But by November 2023, almost monthly increases resulted in a cash rate of 4.35% – the highest interest rates have been in more than a decade.

That’s where rates have remained ever since.

But while this steep rise has been painful for mortgagees to bear, it has also resulted in some of the best returns Aussie savers have enjoyed for a decade. Putting your cash in a savings account or a term deposit today can result in receiving an interest rate of over 5% in some cases.

That’s not a bad return on your investment. Particularly given cash investments theoretically come risk-free thanks to the Federal Government’s bank guarantee (at least for your first $250,000).

However, despite these rate hikes, I still think there is more potential to make more money from ASX dividend shares today than from cash investments

Make money from these two ASX dividend shares

There are two ASX dividend shares today that I think passive income-seeking investors should take stock of if they wish to make more money from their investments.

The first is ASX retail share Super Retail Group Ltd (ASX: SUL). Super Retail is the company behind famous Australian retail names like Peter Alexander, Smiggle, Just Jeans and JayJays.

This company has a long and lucrative history of paying fairly hefty dividends. Despite a recent share price runup, Super Retail stock is still trading on a hefty dividend yield of 5.81% right now. So already we’re ahead of the money you can expect to make from a term deposit (assuming these dividends continue into the future).

But Super Retail’s dividends also typically come with full franking credits attached. This means that this trailing dividend yield grosses up to an even more impressive 8.3% with the value of these franking credits included.

The second stock you might want to look at if you wish to make more money than what a term deposit can offer is Telstra Group Ltd (ASX: TLS).

Telstra is a famous ASX dividend share, with a long history of forking out chunky passive income. If you weren’t aware, Telstra is the largest telecommunications provider in Australia, with a clear market lead on both mobile services and fixed-line home internet connections.

Right now, Telstra shares are trading on a dividend yield of 4.96%. But with this company’s history of paying full franking credits alongside its dividends, we can assume this yield grosses-up to a happy 7.09% with those franking credits included.

Foolish takeaway

Remember, ASX shares come with a level of risk far higher than that of a cash-based investment. There is never any guarantee that a company will continue to pay out dividends at the levels it has in the past. Plus, there’s also the risk of a capital loss when you buy a share as an investment.

However, if you wish to make more money from your cash, dividend shares remain the very best alternative you can ask for.

The post Beat the bank! 2 ASX stocks worth buying to make more money than interest on savings appeared first on The Motley Fool Australia.

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• Buy these ASX 200 dividend shares for passive income in June
• Top brokers name 3 ASX shares to buy next week
• Analysts say these 4 ASX dividend shares are buys
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Sebastian Bowen has positions in Telstra Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group and Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is having a strong start to the week. In afternoon trade, the benchmark index is up 0.8% to 7,786.8 points.

Four ASX shares that are rising more than most today are listed below. Here’s why they are racing higher:

Cettire Ltd (ASX: CTT)

The Cettire share price is up 10% to $2.62. Investors have been buying this online luxury products retailer’s shares after it refuted allegations that it has fake products on its platform. The company commented: “Since commercial launch in 2017, Cettire has handled more than 2 million individual orders. There is not a single confirmed case of a non-genuine item being sold on Cettire’s platform.” Management also highlights that the negative media press has “sought to amplify the claims of parties who have openly taken short positions in Cettire shares and sought to profit from a short-term decline in the share price.”

Lendlease Group (ASX: LLC)

The Lendlease share price is up 10% to $6.47. This follows the release of a major strategy update this morning. The property developer revealed that it is aiming to simplify its global business and bring costs under control. This will see Lendlease exit its struggling international construction projects and focus on its integrated Australian real estate business with international investment management capabilities. These actions are expected to release $4.5 billion of capital from its offshore development projects and assets.

Neuren Pharmaceuticals Ltd (ASX: NEU)

The Neuren Pharmaceuticals share price is up 11% to $22.99. This has been driven by the release of a trial update. The top-line results from Neuren’s phase 2 clinical trial of NNZ-2591 in children with Pitt Hopkins syndrome (PTHS) delivered a “statistically significant improvement” across all four efficacy measures. Neuren CEO Jon Pilcher commented: “We are very excited about the results of this first clinical trial in Pitt Hopkins patients. This underserved community has such urgent unmet need and we can now continue towards our goal of developing a first approved treatment.”

Sayona Mining Ltd (ASX: SYA)

The Sayona Mining share price is up 7% to 4.5 cents. This morning, this lithium miner released the results from 94 new drillholes at its Moblan Lithium Project in Canada. Management highlights that the drilling result demonstrate the high grade nature of the highly strategic asset. Sayona’s Interim CEO, James Brown, commented: “We are delighted with the thick, high-grade drilling results at Moblan confirming it is one of the premier hard rock lithium deposits in North America. Most excitingly, it is clear there remains considerable potential for further expansion of the deposit which is open in all directions.”

The post Why Cettire, Lendlease, Neuren, and Sayona Mining shares are racing higher today appeared first on The Motley Fool Australia.

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• Lendlease share price leaps 9% on plans to bring $4.5 billion back home
• Here is the latest lithium price forecast through to 2027
• 5 things to watch on the ASX 200 on Monday

Motley Fool contributor James Mickleboro 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 recommended Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a decent gain. At the time of writing, the benchmark index is up 0.75% to 7,784.4 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Genetic Signatures Ltd (ASX: GSS)

The Genetic Signatures share price is down 10% to 65.5 cents. This morning, this global molecular diagnostics company announced that it is concluding the development of the EasyScreen Essentials Respiratory Detection Kit for the US market. The company made the decision based on an internal assessment of the commercial landscape. CEO Neil Gunn said: “While it is disappointing to conclude the development of a key product at this late stage, we are very mindful that any investment we make in new products must continue to be aligned with a compelling commercial opportunity.”

Retail Food Group Ltd (ASX: RFG)

The Retail Food Group share price is down almost 3% to 6.8 cents. The quick service restaurant operator released an investor update this morning and revealed that retailing macroeconomic conditions remain weak. As a result, sales are flat year to date in FY 2024. The good news is that management expects “improvement in market conditions in FY25 as tax cuts, growth in real wages and population, and the potential for rate cuts are expected to allow some consumers to ditch frugality.”

Smartpay Holdings Ltd (ASX: SMP)

The Smartpay Holdings share price is down 2.5% to $1.19. This follows the release of the New Zealand based payments company’s full year results. Smartpay reported a 24% increase in revenue to NZ$96.5 million and a 29% jump in normalised profit before tax to NZ$9.8 million. It seems that some investors were expecting an even stronger performance from the company in FY 2024.

St Barbara Ltd (ASX: SBM)

The St Barbara share price is down 17% to 23.2 cents. Investors have been hitting the sell button today after the gold miner released an update on its guidance for FY 2024. According to the release, the company’s Simberi’s gold operation has underperformed materially during the fourth quarter. This has been caused by the important Sorowar ore zone not being accessible until the next quarter, which has resulted in lower ore grades. As a result, full year production and cost guidance for FY 2024 is revised to 52,000 to 56,000 ounces (previously 60,000 to 70,000 ounces) at an all-In sustaining cost of A$3,700 to A$3,900 per ounce (previously A$3,200 to A$3,400).

The post Why Genetic Signatures, Retail Food Group, Smartpay, and St Barbara shares are tumbling today appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro 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.

The All Ordinaries Index (ASX: XAO) has gained 24% over the past five years, with these three ASX All Ords stocks doing plenty of the heavy lifting.

As of the market close on 26 May 2019 (and based on today’s opening prices), the stocks have gained 3,223.1%, 3,471.4% and 3,575.9%, respectively.

Meaning a $500 investment in any of these three ASX All Ords stocks five years ago (well short of a decade) would have grown to more than $16,500 today.

Which fast-rising companies are we talking about?

Read on.

ASX All Ords stocks delivering supersized gains

First up, we have titanium products producer Iperionx Ltd (ASX: IPX).

The ASX All Ords stock hit all-time highs in February this year. Despite retracing 10% from those highs, the Iperionx share price remains up a whopping 3,223.1% over five years.

That’s enough to turn a $500 investment on 26 May 2019 into $16,615.50 today.

The Iperionx share price has continued to outperform in 2024, up 55.0% year to date at the time of writing.

On 15 May, the company successfully completed a $50 million capital raising to scale up the titanium manufacturing capacity at its operations in the US state of Virginia.

The second ASX All Ords stock that’s amply rewarded its longer-term shareholders is lithium explorer Wildcat Resources (ASX: WC8).

The Wildcat Resources share price has surged 3,471.4% over the past five years, which is enough to grow a $500 investment into $17,857.00.

While that’s a very tidy return, investors who sold their holdings in late November could have achieved almost double those returns! The Wildcat Resources share price has retraced by 47.3% since 24 November.

Atop ongoing weakness in lithium prices, Wildcat shares look to have come under pressure with recent drilling results at its Tabba Tabba lithium project in Western Australia apparently failing to meet investor expectations.

Which brings us to the top performer of our three rocketing ASX All Ords stocks, Vulcan Energy Resources Ltd (ASX: VUL).

The company’s primary focus is delivering the world’s first integrated renewable energy and zero-carbon lithium project.

And investors are clearly keen.

The Vulcan Energy share price has exploded by 3,575.9% in five years. Meaning a $500 investment on 26 May 2019 would now be worth an eye-watering $18,379.50.

Though well down from its September 2021 peaks, the ASX All Ords stock has been a strong performer in 2024, up 81% year to date.

Vulcan shares have enjoyed ongoing tailwinds this year amid strong financial support from strategic and financial investors. 2024 also saw Vulcan’s Lithium Extraction Optimisation Plant, located in Germany, commence production of its first lithium chloride product.

The post These 3 ASX All Ords stocks turned $500 into at least $16,500 in less than a decade! appeared first on The Motley Fool Australia.

More reading

• Why Eagers Automotive, Inghams, Patriot Battery Metals, and Wildcat shares are sinking
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Motley Fool contributor Bernd Struben 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.

Cettire Ltd (ASX: CTT) shares are having a very strong start to the week.

In afternoon trade, the ASX All Ords share is up over 8% to $2.58.

Why is this ASX All Ords share charging higher today?

Investors have been buying the online luxury products retailer’s shares today after it responded to another scathing media article in The Australian.

That article alleges that Cettire is selling non-genuine products on its platform and even delivered a customer an empty box.

However, Cettire has responded by stating that the media article “contains a number of claims and allegations that are untrue.”

The ASX All Ords share also highlights that in recent weeks it has been the “subject of negative press articles that have sought to amplify the claims of parties who have openly taken short positions in Cettire shares and sought to profit from a short-term decline in the share price.”

According to the most recent short seller data from ASIC, approximately 4.8% of Cettire’s shares were held short.

Response

Judging by the way the ASX All Ords share is rallying today, it seems that many investors are satisfied with Cettire’s response to the allegations.

Commenting on its supply chain and product quality, the company said:

Cettire has the utmost confidence in the sustainability of its supply chain and the authenticity of all products available and sold via its platform. […] Cettire only works with established distributors in the luxury supply chain. All of Cettire’s suppliers source products directly from luxury brands and are a core part of brands’ distribution channels.

The company highlights that it has not come across a single fake product from over 2 million orders placed on its platform. It adds:

Since commercial launch in 2017, Cettire has handled more than 2 million individual orders. There is not a single confirmed case of a non-genuine item being sold on Cettire’s platform. None of the examples presented to Cettire by The Australian contain any verifiable evidence that a non-genuine item had been purchased via Cettire. Based on information provided by The Australian, the items used as examples have not been inspected by either Cettire or the relevant manufacturer to verify their authenticity.

Management also defended its customer experience and advised that it is “not aware of any ACCC investigation into its customer service practices.”

The ASX All Ords share then concludes:

Cettire categorically rejects the entirely unfounded allegations contained in the article. Selective use of, and reliance on, a small number of unverified customer reviews when more than 60% of Cettire’s revenues come from repeat customers and the Company is transacting over 1 million orders per annum, is an entirely unreasonable representation of Cettire’s business. It is the Board’s opinion that the article misrepresents the Company’s supply chain, product quality and levels of customer satisfaction.

The post Shorted ASX All Ords share rallies 8% despite ’empty box’ allegations appeared first on The Motley Fool Australia.

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• Why Cettire, De Grey Mining, Life360, and Neuren shares are falling today

Motley Fool contributor James Mickleboro 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 recommended Cettire. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

It’s no secret that amongst the ASX bank stocks, Commonwealth Bank of Australia (ASX: CBA) shares are the premium option on the investing menu.

Commonwealth Bank shares have long delivered capital gains that would make the owners of other ASX banks green with envy.

To illustrate, the CBA share price is today sitting at a five-year gain of 53%. That’s almost double that of National Australia Bank Ltd (ASX: NAB), which has returned 29.2% over the same period.

It runs rings around ANZ Group Holding Ltd‘s (ASX: ANZ) 2.6% increase over the same period, and laughably better than Westpac Banking Corp‘s (ASX: WBC) loss of 2.44%.

CBA is also up 20.67% over just the past 12 months, and has raced 5.8% higher over 2024 to date.

Check all of that out for yourself here:

But the downside of this extraordinary success is that today, CBA shares trade at a significant premium to their banking peers. And ‘significant’ is arguably an understatement.

Today, CBA shares are commanding a price-to-earnings (P/E) ratio of 20.99. For one, that’s 33.6% more expensive than even its closest rival – NAB on an earnings multiple of 15.7. But it runs rings around Westpac’s 14.95 and makes ANZ’s 12.52 P/E ratio look silly.

So, to put it simply, investors are today being asked to pay almost $21 for every $1 of CBA’s earnings, but they are only being asked to fork out $12.52 for every $1 of ANZ’s earnings.

Are CBA shares worth the premium price compared to other ASX banks?

It is the conventional wisdom on the ASX that higher P/E shares tend to have better growth prospects than ones with low P/Es. That’s why investors are happy to pay more for the company.

But is this really the case with CBA? Sure, it is the largest ASX bank in terms of both sheer size and market share. It can also be argued that CBA is a higher-quality business. But let’s dig into whether this P/E ratio can be justified.

Comparing bank earnings is always a little tricky because the big four’s financial calendars don’t exactly align. But we can do some quick comparisons regardless.

Earlier this month, CBA released a quarterly update covering the three months to 31 March 2024. As we covered at the time, this had CBA report a 5% drop in statutory net profits after tax to $2.4 billion.

This actually looks worse than the half-year report ANZ delivered around the same time. This had ANZ reveal a 4% fall in profits after tax to $3.41 billion for the six months to 31 March.

NAB’s half-yearly earnings report for the same period advised an underlying profit of $5.47 billion, which was a whopping 10.6% drop over the previous corresponding period.

Westpac also released a half-year earnings report around the same time. This report revealed that the ASX bank suffered an 8% decline in net profits to $3.51 billion over the six months to 31 March.

Foolish takeaway

Yes, CBA’s latest earnings update covered only three months, while the other major banks reported for six months. But it doesn’t exactly show CBA’s earnings leading the pack.

This might be why most ASX analysts are describing the CBA share price as overvalued at the current time.

However, the market is still pricing CBA at a significant premium compared to its peers in ANZ, NAB, and Westpac. Only time will tell if the bank’s future earnings can justify that.

At the latest CBA share price, this ASX 200 banking giant has a market capitalisation of $198.97 billion, with a dividend yield of 3.79%.

The post Are CBA share buyers getting the highest growth in return for being the most expensive? appeared first on The Motley Fool Australia.

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• Hoping to retire? I’d buy these ASX 200 dividend shares for passive income
• Global companies just paid a record $512 billion in Q1 dividends. Here’s how ASX 200 shares stacked up
• ASX 200 bank shares: How dividends offset poor capital growth over 10 years

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. 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.