Fact based stock research
Commonwealth Bank of Australia (ASX:CBA)

AU000000CBA7

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For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".

Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".

Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.

Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.

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Commonwealth Bank of Australia stock research in summary

commbank.com.au

ANALYSIS: With an Obermatt Combined Rank of 54 (better than 54% compared with investment alternatives), Commonwealth Bank of Australia (Diversified Banks, Australia) shares have above-average financial characteristics compared with similar stocks. Shares of Commonwealth Bank of Australia are low in value (priced high) with a consolidated Value Rank of 3 (worse than 97% of alternatives). But they show above-average growth (Growth Rank of 77) and are safely financed (Safety Rank of 82, which means below-average debt burdens). ...read more

RECOMMENDATION: A Combined Rank of 54, is a buy recommendation based on Commonwealth Bank of Australia's financial characteristics. Investors looking for growth and low financial risk may find this stock attractive. While the company Commonwealth Bank of Australia exhibits low value (Obermatt Value Rank of 3), which means that the stock price is rather high, it also demonstrates above-average growth (Obermatt Growth Rank of 77). This is a typical case, as high-growth companies are often expensive. Good financing practices (Obermatt Safety Rank of 82) are a double-edged sword: if the company continues growing, low debt limits shareholder returns. But if the company increases its debt, it will also increase risk. In other words, this is an investment on the safer side, despite the above-average price (low value). Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	3
Growth Rank	77
Safety Rank	82
Combined Rank	54

Country	Australia
Industry	Diversified Banks
Index	ASX 100, ASX 200, ASX 300, ASX 50, Human Rights, Renewables Users
Size class	XX-Large

This stock has achievements: Top 10 Stock.

14-Nov-2024. Stock data may be delayed. Log in or sign up to get the most recent research.

Further information

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Commonwealth Bank of Australia

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	4	7	8	3
GROWTH
GROWTH	51	43	9	77
SAFETY
SAFETY	27	16	50	82
SENTIMENT
SENTIMENT	n/a	48	54	^new
360° VIEW
360° VIEW	n/a	1	14	^new

Most recent update of the stock research: 14-Nov-2024. Financial reporting date used for calculating ranks: 30-Jun-2024. Stock research history is based on the Obermatt Method. The higher the rank, the better Commonwealth Bank of Australia is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	4	7	8	3
GROWTH
GROWTH	51	43	9	77
SAFETY
SAFETY	27	16	50	82
COMBINED
COMBINED	19	8	6	54

Last update of combined financial performance: 14-Nov-2024. Stock analysis on combined financial performance: The higher the rank of Commonwealth Bank of Australia the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 3 (worse than 97% compared with alternatives), Commonwealth Bank of Australia shares are significantly more expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with all four indicators below average for Commonwealth Bank of Australia. Price-to-Sales is 3 which means that the stock price compared with what market professionals expect for future profits is higher than 97% of comparable companies, indicating a low value concerning Commonwealth Bank of Australia's sales levels. Price-to-Book Capital (also referred to as market-to-book ratio) also has a low Price-to-Book Rank of 1, which means that both reliable company size indicators, sales, and invested capital cannot explain the high stock price of Commonwealth Bank of Australia. In addition, the two profit-related value indicators, Price-to-Profit (also referred to as price-earnings, P/E) with a low rank of 3 and Dividend Yield, which is lower than 77% of comparable companies, also make the stock more expensive compared with investment alternatives. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 3, is a sell recommendation based on Commonwealth Bank of Australia's stock price compared with the company's operational size and dividend yields. How can market participants pay such a high price for Commonwealth Bank of Australia? One reason may be that the company is simply too popular. If enough people want a particular stock, its price can exceed reasonable levels. This is often the case for companies offering new and exciting products and everybody wants a piece of the action. Should you pay a lot for a hot stock such as Commonwealth Bank of Australia? It's risky, and even if the stock price continues to grow because of popular demand, it may return to more typical lower levels later. And that return can be sudden and quick, making it impossible for retail investors to exit on time. Sometimes, high prices are deserved. This is the case when it is justified to believe that the company will dominate a market with high profit margins. It has happened in the past for many technology companies and indeed for commercially successful pharmaceutical discoveries. Sometimes they last, sometimes, they get eaten alive. Commonwealth Bank of Australia may be such a type of stock. That would mean, retail investors should be careful, only considering investing a small part of their wealth in this exciting category and always being ready to lose more than half, if not all of the investment. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is essential in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	4	8	8	3
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	17	7	5	3
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	4	5	3	1
DIVIDEND YIELD
DIVIDEND YIELD	44	59	52	23
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	4	7	8	3

Last update of Value Rank: 14-Nov-2024. Stock analysis on value ratios: The higher the rank, the lower the value ratio of Commonwealth Bank of Australia; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 77 (better than 77% compared with alternatives) for 2024, Commonwealth Bank of Australia shows one of the highest growth dynamics in its industry. Investors also speak of high momentum. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Commonwealth Bank of Australia. Capital Growth has a rank of 81, which means that currently professionals expect the company to grow its invested capital more than 20% of its competitors. Investors welcomed this, visible in the Stock Returns rank of 85 (above 85% of alternative investments). But Sales Growth has only a rank of 48, which means that, currently, professionals expect the company to grow less than 52% of its competitors, and Profit Growth is also low at a rank of 20. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 77, is a buy recommendation for growth and momentum investors. This is an ambiguous picture. Revenue growth and capital growth are strong, but the growth in profit, which seems good, can also be an indication that growth momentum may be negative. The fact that stock returns have been above average doesn't help much, as stock returns are less reliable in showing a company’s future growth potential. Prices may perform well for the simple reason that investors were too pessimistic in the past and are now correcting their opinions and moving the stock price to a more reasonable level. As the growth picture is mixed for Commonwealth Bank of Australia, investors may want to look at value and sentiment indicators for a well-rounded picture of this stock. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	48	50	25	48
PROFIT GROWTH
PROFIT GROWTH	46	6	12	20
CAPITAL GROWTH
CAPITAL GROWTH	n/a	89	43	81
STOCK RETURNS
STOCK RETURNS	44	47	37	85
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	51	43	9	77

Last update of Growth Rank: 14-Nov-2024. Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Commonwealth Bank of Australia.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 82 (better than 82% compared with alternatives) for 2024, the company Commonwealth Bank of Australia has safe financing practices, which means that their overall debt burden is low. This doesn't mean that the business of Commonwealth Bank of Australia is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with two out of three indicators above-average for Commonwealth Bank of Australia. Refinancing is at 100, meaning the portion of the debt that is about to be refinanced is below average. It has less debt in the refinancing stage than 100% of its competitors. Liquidity is also good at 63, meaning the company generates more profit to service its debt than 63% of its competitors. This indicates that the company is safer when it comes to debt service. However, Leverage is rather large at 38, which means the company has an above-average debt-to-equity ratio. It has more debt than 62% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 82 (better than 82% compared with alternatives), Commonwealth Bank of Australia has a financing structure that is significantly safer than that of its competitors. This is not bad if things go well. The higher debt level means better returns to shareholders if things go well. Many top-performing companies operate with higher debt levels, and Commonwealth Bank of Australia could be in that group. But if you expect the environment to turn rougher, the higher leverage could become a problem. The same is valid if you expect interest rates to rise. That could squeeze shareholder returns, which so far have benefitted from better conditions. In the long-term, investors may have a debt challenge with Commonwealth Bank of Australia and should also compare Obermatt’s Value, Growth, and Sentiment Ranks before making a decision. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	46	29	40	38
REFINANCING
REFINANCING	30	20	92	100
LIQUIDITY
LIQUIDITY	13	55	31	63
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	27	16	50	82

Last update of Safety Rank: 14-Nov-2024. Stock analysis on safety metrics: The higher the rank, the lower the leverage of Commonwealth Bank of Australia and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	1	1	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	50	59	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	100	66	^new
MARKET PULSE
MARKET PULSE	n/a	46	69	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	48	54	^new

Last update of Sentiment Rank: 14-Nov-2024. Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Commonwealth Bank of Australia.
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