13 November, 2019 (16:00:00 AEST)

Commonwealth Bank of Australia loses $A2.8 billion in MCap, steepest heavyweight fall in All Ordinaries Index


Commonwealth Bank of Australia (ASX:CBA), Australia's largest Bank by market cap, has decreased $A1.59 (2.0%) from its previous trading session to close at $A79.24. Compared with the All Ordinaries Index which fell 51.5 points (0.8%) in the day, the relative price change was -1.2%. The fall was exacerbated by firm volume of 1.1 times the average daily volume of 2.9 million shares. It posted the steepest fall in MCap with the most influence on the All Ordinaries Index. There were 3,275,922 shares worth $A259.6 million traded today.

BULLISH TURNING POINT

Dividend Yield increases to 5.44%
Based on dividends of $A4.31 per share for the trailing twelve months and the last price of $A79.24 the dividend yield is 5.44%, a significant improvement from 5.33% on the previous day.

Stock Summary
CurrencyAustralian Dollar (AUD) 1 AUD = 0.69 USD
Today's close (AUD)79.24
52-Week Range (AUD)63.8-82.6
SectorBank sector
Shares Outstanding1,770,239,507
Market Cap$A140.3 billion ($US96.1 billion)


Highlights in today's Report:

SECTION 1 TODAY'S BEARISH SIGNALS

SECTION 2 TODAY'S BULLISH SIGNALS

SECTION 3 RELATED NEWS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A79.24):

SECTION 4 THE PAST WEEK

SECTION 5 ONGOING BULLISH PARAMETERS

SECTION 6 ONGOING BEARISH PARAMETERS

SECTION 7 SUMMARY FINANCIALS

SECTION 8 CORPORATE PROFILE

SECTION 1 COMMONWEALTH BANK OF AUSTRALIA BEARISH SIGNALS

1.1 Overvaluation [compared with sector average]:
Price/Earnings
+ Price/Earnings of 16.7 [13.6].
Price to Book
+ Price to Book of 2.3 [1.8].

1.2 Overvaluation Indicator and rank of Commonwealth Bank of Australia in the Australian market:
DescriptionValueRank In Market
* EV/EBITDA4.7In Bottom Quartile

* Enterprise value of $A133.9 billion is divided by Earnings before interest tax depreciation and amortization of $A28.2 billion.

1.3 Short Selling:
+ In the Australian Short Selling market of 866 stocks, short selling (on ASX and CHI-X) as a % of issued shares ranked 215th and within the top quartile of stocks, a bearish indicator.

1.4 Downtrend:
Today's Volatility:
+ Commonwealth Bank of Australia drops 2.0% on high volatility: Since the start of trading its volatility (highest price minus lowest price/lowest price) of 2.3% was 1.7 times the average daily volatility of 1.3%, up from 1.2% on Tuesday and 0.9% on Monday. A fall in the price on high volatility is a bearish signal.
Price/Moving Average Price and MACD:
+ The Price/MAP of 1.05 for CBA is lower than the Price/MAP for the All Ordinaries Index of 1.06.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 79.32 minus the 26-day EMA of 79.37 is negative suggesting a bearish signal. Both the 12-day EMA as well as the 26-day EMA are falling, another bearish signal.
Relative Strength (6 months):
+ In the Australian market of 1,375 stocks and 25 units traded today, the stock has a 6-month relative strength of 60 which means it has outperformed 60% of the market.

SECTION 2 COMMONWEALTH BANK OF AUSTRALIA BULLISH SIGNALS

2.1 Undervaluation [compared with sector average]:
Earnings Yield
+ Earnings yield of 6.0% is 4.7 times the 10-year bond yield of 1.28%.
Dividend Yield
+ To quote Benjamin Graham: "A dividend yield of at least two-thirds the triple-A bond yield"; the stock's dividend yield is 4.3 times the triple-A bond yield of 1.3%.
+ The relative yield of CBA, defined by its yield of 5.4%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 4.9% is 111.2%. This suggests Commonwealth Bank of Australia stock is undervalued in dividend yield terms.
MCap/Total Assets
+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.1. Compared with the rest of the market the stock is undervalued and ranks in the top 3% of stock by value of Q Ratio.
Brand Value/Enterprise Value
+ Brandirectory have estimated Commonwealth Bank of Australia's brand value at $A7.7 billion. The Brand Value represents 5.8% of the estimated Enterprise Value of $A133.9 billion. Enterprise Value is defined as MCap of $A140.3 billion plus net debt of $A-6.4 billion.

2.2 Undervaluation Indicator and rank of Commonwealth Bank of Australia in the Australian market:
DescriptionValueRank In Market
Cash to MCap %38.9In Top 5%

2.3 Uptrend:
Price/Moving Average Price:
+ The price to 200-day MAP ratio is 1.05, a bullish indicator. In the past 200 days this ratio has exceeded 1.05 141 times suggesting further upside. The 50-day MAP of $A79.92 is higher than the 200-day MAP of $A75.76, a bullish indicator. The 200-day MAP has increased to $A75.76. An increase is another bullish indicator.
Past Week:
+ Commonwealth Bank of Australia is placed 415/1377 in BuySellSignals' ranking of Australian performers in the past week, a percentile ranking of 70.
+ In the past week, volume was 1.0 times average and the shares were up 1.6%.
Past Month:
+ In the past three months the stock has hit a new 52-week high four times, pointing to an uptrend.
+ The present value of $A1,000 (PV1000) invested one month ago in Commonwealth Bank of Australia is $A1,002, for a capital gain of $A2.
PV$10001-week1-month1-year
CBA.ASX1,0161,0021,254
All Ordinaries Index1,0081,0041,149

2.4 High Price Performance Indicators and rank of Commonwealth Bank of Australia in the Australian market:
DescriptionCBA ValueRank In Market
Today's Trading Turnover$A259.6 millionIn Top 1%
MCap$A140.3 billionIn Top 1%

SECTION 3 COMMONWEALTH BANK OF AUSTRALIA RELATED NEWS

American Depository Receipts

+ Commonwealth Bank of Australia ADR in 2nd consecutive rise, nears two-month high
Commonwealth Bank of Australia (OT:CMWAY), the International Depository Receipt (IDR) market's 3rd largest Bank by market cap, extended its gains on Tuesday, rising an additional 45.0c (0.8%) to close at $US55.49. The ADR increased 1.1% on Monday. This brought its 2-day rise to 1.9%, compared with the Bank of New York Mellon Composite ADR Index which fell 0.5 points (0.3%) in the two days for a relative price increase of 2.2%. Cumulative volume in the 2 days was 0.9 times the average 2-day volume of 18,928 ADRs. The ADR is now approaching its 46-day high of $US55.68. There were 16,000 ADRs worth $US887,840 traded today.

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A79.24):

SECTION 4 THE PAST WEEK

4.1 Snapshot: Commonwealth Bank of Australia stock was up $A1.24 or 1.6% in the past week. Volume in the week equalled average trading of 14.6 million shares. It outperformed the All Ordinaries index in 5 out of 5 days.
DayCommonwealth Bank of AustraliaClose price [AUD]Price change %Relative change %Comment
TuesdayIn its biggest weekly gain in 6 months80.831.01.3VI*=1.1
MondayAdds $A1.6 billion in MCap, top heavyweight rise in Bank sector80.051.10.5Price rise on rising relative strength
FridayRises for a fourth consecutive day, a four-day rise of 2.8%79.170.20.3Price rise on rising relative strength
ThursdayAdds $A1.8 billion in MCap, top heavyweight rise in All Ordinaries Index79.041.30.4Top Rise; VI*=1.1
WednesdayRises for a second consecutive day, a two-day rise of 1.2%78.00.40.9Price rise on rising relative strength
[Volume Index (VI); 1 is average]

4.2 Volatility:
+ Commonwealth Bank of Australia is at a discount of 4.1% to its 12-month high of $A82.64 on September 19. It is also at a premium of 24.2% to the 12-month low of $A63.80 on December 24, 2018.

SECTION 5 ONGOING BULLISH PARAMETERS

5.1 Performance:
+ Return on Equity 12.0% [11.4%].
+ Return on Capital Employed 40.5% [5.0%].

5.2 Low Debt Indicators:
+ The debt to equity ratio of 33.0% is under a safe benchmark figure of 50%. Moreover, it has improved from 33.9% a year ago.

5.3 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the real rate of return has averaged 12%. The Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in CBA would have produced a return of 24.8%.
CBAClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Nov 1379.244.3118.36.424.8
1 Yr ago66.964.31(7.1)6(1.1)
2 Yrs ago72.094.2912.46.719.1
3 Yrs ago64.144.23.66.810.4
4 Yrs ago61.94.2(0.1)6.86.6

Close 5 years ago $A61.98

5.4 Present Value of AUD1,000 invested in Commonwealth Bank of Australia since listing twenty-eight years ago
- Commonwealth Bank of Australia shares closed at $A2.89 when it was first listed on September 12, 1991.
- The present value of AUD1,000 (PV1000) invested in Commonwealth Bank of Australia on the date of listing is $A96,063, including a capital gain of $A26,456 and dividend reinvested of $A68,607.
- Multiplier in AUD = 96.063x
- Annualized Total Shareholder Returns (TSR) in AUD= 17.6%

5.5 Present Value of USD1000 invested in Commonwealth Bank of Australia since listing twenty-eight years ago
- Commonwealth Bank of Australia shares closed at $A2.89 when it was first listed on September 12, 1991.
- The present value of USD1,000 (PV1000) invested in Commonwealth Bank of Australia on the date of listing is $US82,790, including a capital gain of $US22,662 and dividend reinvested of $US59,128.
- Multiplier in USD = 82.79x
- Annualized Total Shareholder Returns (TSR) in USD = 17.0%

5.6 Increased ADVT past five years
Avg. Daily Volume Traded 12 months ended Nov 13, million shares
YearADVT
20192.9
20182.8
20173.0
20163.0
20152.9
In the past five years, Average Daily Volume of Trading (ADVT) has increased 1.1% to 2.9 million shares.

5.7 Increased VWAP
Past five years, 12 months ended Nov 13 (AUD)
YearHigh PriceVWAPLow Price
201982.6473.8963.8
201873.7167.6461.55
201776.0270.2963.48
201668.6662.0157.34
201574.8164.4256.1
In the past five years Volume Weighted Average Price (VWAP) has increased by 14.7% to $A73.89. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

5.8 Increased Average Daily Turnover
Past five years, 12 months ended Nov 13 (AUD million)
YearAverage Daily Turnover
2019215.5
2018190.1
2017212.1
2016187.9
2015186.5
In the past five years, average daily share turnover has increased 15.6% to $A215.5 million. This suggests increased liquidity.

5.9 Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 40.3% (or a turnover period of 2 years 5 months). The average length of ownership of the stock is 1.5 times the average holding period of 1 year 8 months for stocks in the All Ordinaries Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 6 ONGOING BEARISH PARAMETERS

6.1 Past 5 years Annual EPS growth:
Annual ReportEPS ($A)Growth %
20194.74-8.7
20185.19-10.1
20175.779.0
20165.29-2.0
20155.44.0
Average Annual Compounded rate of growth in EPS for the 5 years was -1.8%. There have been two rises and three declines in the past 5 years.

6.2 Decrease in Insider Buying
In the past 5 years a total of 88,123,716 Commonwealth Bank of Australia shares (or 5.0% of the total shares on issue) worth $A7.7 million were bought by insiders. Based on a dynamic start date of 5 years ago, insider buying has averaged 17,624,743 shares per year. In the past year, insiders bought 5,886 shares, a decrease of 100.0% from the previous year.

SECTION 7 COMMONWEALTH BANK OF AUSTRALIA SUMMARY FINANCIALS

7.1 Dividend History
Trailing 12 months dividend for the 12 months ended November 13 has improved from $A4.20 in 2015 to $A4.31 in 2019.

7.2 Financials Summary
Year endedJun 2019Jun 2018Jun 2017
Pretax (USD B)8.18.99.4
Net (USD B)5.76.26.8
EPS (AUD)4.745.195.77
+ Net profit was down 7.7% from US$6.2 billion in 2018 to US$5.7 billion in 2019.
+ Earnings Per Share (EPS) was down 8.7% from $A5.19 to $A4.74.

7.3 Annual Report: Key Parameters
FY2019 Annual Report: Commonwealth Bank of Australia Net Profit down 7.7%

Release Date: August 07, 2019
Commonwealth Bank of Australia (ASX:CBA) reported net profit for the year-ended 30 June 2019 of $A8.4b, down 7.7% from $A9.1b in the previous year. Earnings per share (EPS) were down 8.7% from $A5.19 in FY2018 to $A4.74 in FY2019.

Major changes compared with previous year:
Favourable Changes:
- Working capital to total assets up 5.4% to 3.2%
Unfavourable Changes:
- Net profit down 7.7% from $A9.1b ($US6.7b) to $A8.4b ($US5.9b)
- EPS down 8.7% from $A5.19 ($US3.83) to $A4.74 ($US3.33)
- EBIT to total assets down 2.2 from 3% to 2.9%
- Return on Equity down from 13.4% to 12%
Note:
- Retained earnings to total assets steady at 2.9%

Annual Report [Year-on-year comparison: 2019 vs 2018]
Company Name : Commonwealth Bank of Australia (CBA)     
June 302019201820192018Change
Description$A ('000)$A ('000)$US ('000)$US ('000)(%)
EBITDA28,231,00028,824,00019,827,534.721,281,652.7Down 2.1
EBITD28,231,00028,824,00019,827,534.721,281,652.7Down 2.1
EBIT28,231,00028,824,00019,827,534.721,281,652.7Down 2.1
Finance cost16,468,00015,802,00011,566,003.411,667,106.5Up 4.2
Pre-Tax Profit/(Loss)11,763,00013,022,0008,261,531.39,614,546.3Down 9.7
Profit/(Loss) after Tax8,360,0009,057,0005,871,495.56,687,063.9Down 7.7
Working Capital30,959,00029,335,00021,743,496.421,658,939.9Up 5.5
Current Assets937,812,000936,640,000658,655,377.6691,550,347.8Up 0.1
Shareholders' Funds69,594,00067,306,00048,878,093.249,694,106.3Up 3.4
Total Assets976,502,000975,165,000685,828,602.7719,994,549.6Up 0.1
Current Debt22,966,00022,992,00016,129,756.716,975,706.4Down 0.1
Total Debt22,966,00022,992,00016,129,756.716,975,706.4Down 0.1
Cash and cash equivalents29,387,00036,417,00020,639,430.526,887,800Down 19.3
Net Assets69,649,00067,860,00048,916,721.550,103,141.7Up 2.6
Net Tangible Assets61,684,00058,770,00043,322,647.143,391,712.9Up 5

Year-on-year comparison of Per Share figures
* EPS Dilution Factor = Net Profit change / EPS change
June 302019201820192018Change (%)
Description$A $A $US $US  
EPS Final$A4.7$A5.23.33.8Down 8.7
    EPS Dilution Factor *0.89    

Year-on-year comparison of Performance Ratios
June 3020192018Change (%)
Return on Equity (%)1213.4Down 10.4


Currency Conversion (June 30, 2019): $US1 = $A1.42
Currency Conversion (June 30, 2018): $US1 = $A1.35

Three-year record of growth and performance:
EBITDA averaged $US16.6B or $A23.6B over the last 3 years. Operating Profit averaged $US16.6B or $A23.6B over the last 3 years. Net Profit averaged $US6.4B or $A9.1B over the last 3 years. In the last 3 years EBITDA averaged $A23.6B ($US16.6B) and Net Profit averaged $A9.1B ($US6.4B)
DescriptionAnnual ($A B)Annual ($US B)3-year Avg ($A B)3-year Avg ($US B)3-year CAGR %
EBITDA28.219.823.616.630
Operating Profit28.219.823.616.630
Net Profit8.45.99.16.4(3.3)

Three-year record of ROE, ROA and ROCE
In 2019 Return on Equity 3-years average is 13.6% (All Figures in %)
Description20193-year Avg
Return on Equity1213.6
Return on Assets0.90.9
Return on Capital Employed40.528.2

SECTION 8 CORPORATE PROFILE

8.1 Activities
Commonwealth Bank of Australia (CBA) is Australia's leading providers of integrated financial services, providing retail, business and institutional banking, funds management, superannuation, life insurance, general insurance, broking services and finance company activities. Their operations are conducted primarily in Australia and New Zealand. In addition, they also operate in a number of other countries, including the United Kingdom, the United States, China, Japan, Singapore, Hong Kong, Indonesia and South Africa.

8.2 Top Management
The chairman is Catherine Livingstone, the chief executive officer is Matt Comyn and the chief financial officer is Alan Docherty.

8.3 Issued Capital and MCap
Based on 1,770,239,507 issued shares the market capitalisation is $A140.3 billion.

8.4 Vanguard Total World Stock ETF 7627:
The stock was one of 7627 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 15,000 shares in the period Jul 31, 2019 to Aug 31, 2019 worth $US-1,178,034 at an estimated Volume Weighted Average Price (VWAP) of $US78.5356. As at Aug 31, 2019, the Vanguard Total World Stock ETF held 570,033 shares worth $US30,052,815 or 0.18% by value of the ETF's portfolio [Ranked 77 out of 7627 by value and 1 out of 235 for Australia].

COMPANY IDENTIFIERS
Contact: (02) 9378 2000
Physical Address: Ground Floor, Tower 1, 201 Sussex Street, SYDNEY, NSW, AUSTRALIA, 2000
State/Province/Country: Australia
Exchange: Australian Securities Exchange

Business Sector: Banking & Investment Services
Industry Group: Banking Services
Industry: Banks
Economic Sector: Financials

ISIN: AU000000CBA7
AU:CBA; ASX:CBA; AX:CBA; CBA.AX
PermID: 4295856152
RIC: CBA.AX

Commonwealth Bank Of Australia, Commonwealth Bank Of Australia.

For comprehensive research on Commonwealth Bank of Australia, including details from the latest Annual Report and extensive financial data, please search by Company Name on source name "News Bites Stock Review" on Lexis-Nexis platforms.

Source: www.BuySellSignals.com