16 September, 2019 (16:00:00 AEST)
Commonwealth Bank of Australia falls 0.7% from 14-day high
Commonwealth Bank of Australia (ASX:CBA), Australia's largest Bank by market cap, decreased 45.0c (0.6%) from its previous close of $A82.14 on Friday. It hit a 14-day high of $A82.24 during the day but fell 0.7% before settling at $A81.69 on Monday. Its Williams % R is -9.3 which suggests it is overbought, a bearish signal. Its Relative Strength Index [RSI] is 83.1. An RSI reading of between 70 and 100 suggests Commonwealth Bank of Australia's stock is close to its 14-day high, which is also a bearish signal. Compared with the All Ordinaries Index which rose 4.9 points (0.07%) in the day, the relative price change was -0.6%. There were 2,544,920 shares worth $A207.9 million traded today. The volume was 0.9 times the average daily trading volume of 2.9 million shares.
Highlights in today's Report:
SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES
SECTION 3 TODAY'S BULLISH SIGNALS
SECTION 6 ONGOING BULLISH PARAMETERS
SECTION 8 SUMMARY FINANCIALS
|Description||Value||Rank In Market|
|* EV/EBITDA||4.9||In Bottom Quartile|
* Enterprise value of $A138.2 billion is divided by Earnings before interest tax depreciation and amortization of $A28.2 billion.
2.3 Short Selling:
+ In the Australian Short Selling market of 863 stocks, short selling (on ASX and CHI-X) as a % of issued shares ranked 128th and within the top quartile of stocks. This means it was higher than market average of 0.05%, a bearish indicator.
+ The current short volume is 1.1 times its own historical average of 0.1%. It soared 131.9% from the previous day, soared 81.5% from a week ago and soared 10.8% from a month ago, a significant bearish indicator.
+ Commonwealth Bank of Australia drops on high volatility: Since the start of trading its volatility (highest price minus lowest price/lowest price) of 0.7% was 0.5 times the average daily volatility of 1.4%, up from 0.6% on Friday and 0.4% on Thursday.
Relative Strength (6 months):
+ In the Australian market of 1,433 stocks and 26 units traded today, the stock has a 6-month relative strength of 66 which means it has outperformed 66% of the market.
+ The Relative Strength Index (RSI) of 83.1 has penetrated the overbought line of 70, suggesting the price gain of 83.1% in the last 14 days is unusually high.
+ The stock is overbought according to the Williams % R indicator of -9.3, suggesting the price is close to its 14-day high of $A82.24.
+ The Stochastic indicator of 96.9 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.
SECTION 3 COMMONWEALTH BANK OF AUSTRALIA BULLISH SIGNALS3.1 Undervaluation [compared with sector average]:
+ Earnings yield of 5.8% is 4.7 times the 10-year bond yield of 1.23%.
+ 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 5.6% of the estimated Enterprise Value of $A138.2 billion. Enterprise Value is defined as MCap of $A144.6 billion plus net debt of $A-6.4 billion.
3.2 Undervaluation Indicator and rank of Commonwealth Bank of Australia in the Australian market:
|Description||Value||Rank In Market|
|Cash to MCap %||37.8||In Top 5%|
Price/Moving Average Price and MACD:
+ The Price/MAP of 1.12 for CBA is higher than the Price/MAP for the All Ordinaries Index of 1.08.
+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 80.11 minus the 26-day EMA of 79.15 is positive suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.
+ The price to 50-day EMAP ratio is 1.0, a bullish indicator. The 50-day EMAP has increased to $A78.49. An increase is another bullish indicator.
+ The price to 200-day MAP ratio is 1.12, a bullish indicator. In the past 200 days this ratio has exceeded 1.12 38 times suggesting further upside. The stock is trading above both its MAPs and the 50-day MAP of $A78.60 is higher than the 200-day MAP of $A73.09, a bullish indicator. The 200-day MAP has increased to $A73.09. An increase is another bullish indicator.
+ Commonwealth Bank of Australia is placed 442/1315 in BuySellSignals' ranking of Australian performers in the past week, a percentile ranking of 66.
+ In the past week, volume was 0.9 times average and the shares were up 2.4%. Monday's close price is at a 0.6% premium to its 5-day Volume Weighted Average Price (VWAP) of $A81.18.
+ In the past three months the stock has hit a new 52-week high six times, pointing to an uptrend.
+ The present value of $A1,000 (PV1000) invested one month ago in Commonwealth Bank of Australia is $A1,098, comprising a capital gain of $A66 and dividend reinvested of $A32.
|All Ordinaries Index||1,005||1,025||1,081|
3.4 High Price Performance Indicators and rank of Commonwealth Bank of Australia in the Australian market:
|Description||CBA Value||Rank In Market|
|Today's Trading Turnover||$A207.9 million||In Top 1%|
|MCap||$A144.6 billion||In Top 1%|
|Volatility %||0.7||In Top 8%|
SECTION 4 COMMONWEALTH BANK OF AUSTRALIA RELATED NEWSAmerican Depository Receipts
+ Commonwealth Bank of Australia ADR rises for an eighth consecutive day, an eight-day rise of 6.8%
Commonwealth Bank of Australia (OT:CMWAY), the International Depository Receipt (IDR) market's 3rd largest Bank by market cap, has risen 65.0c (1.2%) for an eighth consecutive day on Friday. This brought its eight-day rise to $US3.60 (6.8%), compared with the Bank of New York Mellon Composite ADR Index which rose 5.4 points (4.1%) in the eight days for a relative price increase of 2.7%. Cumulative volume in the 8 days was 0.3 times the average 8-day volume of 23,958 ADRs. The ADR last traded at $US56.59. There were 6,400 ADRs worth $US362,176 traded today.
RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A81.69):
SECTION 5 THE PAST WEEK5.1 Snapshot: Commonwealth Bank of Australia stock was up $A1.88 or 2.4% in the past week. Volume in the week was 0.9 times average trading of 14.6 million shares. It outperformed the All Ordinaries index in 5 out of 5 days.
|Day||Commonwealth Bank of Australia||Close price [AUD]||Price change %||Relative change %||Comment|
|Friday||Hits year-high 6th time in three months||82.14||1.0||0.8||Top Rise; VI*=1.2|
|Thursday||Hits three-month high||81.35||0.9||0.7||Price rise on rising relative strength|
|Wednesday||Increases strengthening above moving average price||80.6||0.9||0.5||Price rise on rising relative strength|
|Tuesday||In 4th consecutive rise, nears two-month high||79.89||0.1||0.6||Price rise on rising relative strength|
|Monday||Hits two-month high||79.81||0.3||0.2||Price rise on rising relative strength|
+ Commonwealth Bank of Australia is at a discount of 0.7% to its 12-month high of $A82.24 on September 13. It is also at a premium of 32.6% to the 12-month low of $A61.61 on October 15, 2018.
SECTION 6 ONGOING BULLISH PARAMETERS6.1 Performance:
+ Return on Equity 12.0% [11.4%].
+ Return on Capital Employed 40.5% [4.9%].
6.2 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.
6.3 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the real rate of return has averaged 13.4%. The Moving Annual Return has consistently exceeded 4%.
|CBA||Close (AUD)||Dividends (AUD)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||67.53||4.31||(1.1)||6.3||5.2|
|2 Yrs ago||68.26||4.29||16||7.3||23.3|
|3 Yrs ago||58.82||4.2||(2.1)||7||4.9|
|4 Yrs ago||60.09||4.2||(1.0)||6.9||6.0|
Close 5 years ago $A60.67
6.4 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 $A99,033, including a capital gain of $A27,305 and dividend reinvested of $A70,728.
- Multiplier in AUD = 99.033x
- Annualized Total Shareholder Returns (TSR) in AUD= 17.8%
6.5 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 $US85,610, including a capital gain of $US23,468 and dividend reinvested of $US61,142.
- Multiplier in USD = 85.61x
- Annualized Total Shareholder Returns (TSR) in USD = 17.2%
6.6 Increased ADVT past five years
Avg. Daily Volume Traded 12 months ended Sep 16, million shares
6.7 Increased VWAP
Past five years, 12 months ended Sep 16 (AUD)
|Year||High Price||VWAP||Low Price|
6.8 Increased Average Daily Turnover
Past five years, 12 months ended Sep 16 (AUD million)
|Year||Average Daily Turnover|
6.9 Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 37.9% (or a turnover period of 2 years 7 months). The average length of ownership of the stock is 1.5 times the average holding period of 1 year 8 months for stocks in the All Ordinaries Index suggests a larger number of core investors, making a long-term investment safer.
SECTION 7 ONGOING BEARISH PARAMETERS7.1 Growth:
Annual Trend in EPS and EBITDA:
+ Profit growth and EBITDA growth have shown signs of deterioration in recent years. [Year ended, all figures in %]
|Year||EPS Growth||EBITDA Growth|
7.2 Past 5 years Annual EPS growth:
|Annual Report||EPS ($A)||Growth %|
7.3 Decrease in Insider Buying
In the past 5 years a total of 88,123,826 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 17,624,765 shares per year. In the past year, insiders bought 5,886 shares, a decrease of 100.0% from the previous year.
SECTION 8 COMMONWEALTH BANK OF AUSTRALIA SUMMARY FINANCIALS8.1 Dividend History
Trailing 12 months dividend for the 12 months ended September 16 has improved from $A4.20 in 2015 to $A4.31 in 2019.
8.2 Financials Summary
|Year ended||Jun 2019||Jun 2018||Jun 2017|
|Pretax (USD B)||8.1||8.9||9.4|
|Net (USD B)||5.7||6.2||6.8|
+ Earnings Per Share (EPS) was down 8.7% from $A5.19 to $A4.74.
8.3 Annual Report: Key Parameters
FY2019 Annual Report: Commonwealth Bank of Australia Net Profit down 7.7%
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.
Major changes compared with previous year:
- Working capital to total assets up 5.4% to 3.2%
- 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%
- 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)|
|Description||$A ('000)||$A ('000)||$US ('000)||$US ('000)||(%)|
|Finance cost||16,468,000||15,802,000||11,566,003.4||11,667,106.5||Up 4.2|
|Pre-Tax Profit/(Loss)||11,763,000||13,022,000||8,261,531.3||9,614,546.3||Down 9.7|
|Profit/(Loss) after Tax||8,360,000||9,057,000||5,871,495.5||6,687,063.9||Down 7.7|
|Working Capital||30,959,000||29,335,000||21,743,496.4||21,658,939.9||Up 5.5|
|Current Assets||937,812,000||936,640,000||658,655,377.6||691,550,347.8||Up 0.1|
|Shareholders' Funds||69,594,000||67,306,000||48,878,093.2||49,694,106.3||Up 3.4|
|Total Assets||976,502,000||975,165,000||685,828,602.7||719,994,549.6||Up 0.1|
|Current Debt||22,966,000||22,992,000||16,129,756.7||16,975,706.4||Down 0.1|
|Total Debt||22,966,000||22,992,000||16,129,756.7||16,975,706.4||Down 0.1|
|Cash and cash equivalents||29,387,000||36,417,000||20,639,430.5||26,887,800||Down 19.3|
|Net Assets||69,649,000||67,860,000||48,916,721.5||50,103,141.7||Up 2.6|
|Net Tangible Assets||61,684,000||58,770,000||43,322,647.1||43,391,712.9||Up 5|
Year-on-year comparison of Per Share figures
|June 30||2019||2018||2019||2018||Change (%)|
|EPS Final||$A4.7||$A5.2||3.3||3.8||Down 8.7|
|EPS Dilution Factor *||0.89|
Year-on-year comparison of Performance Ratios
|June 30||2019||2018||Change (%)|
|Return on Equity (%)||12||13.4||Down 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)
|Description||Annual ($A B)||Annual ($US B)||3-year Avg ($A B)||3-year Avg ($US B)||3-year CAGR %|
Three-year record of ROE, ROA and ROCE
In 2019 Return on Equity 3-years average is 13.6% (All Figures in %)
|Return on Equity||12||13.6|
|Return on Assets||0.9||0.9|
|Return on Capital Employed||40.5||28.2|
SECTION 9 CORPORATE PROFILE9.1 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.
9.2 Top Management
The chairman is Catherine Livingstone, the chief executive officer is Matt Comyn and the chief financial officer is Alan Docherty.
9.3 Issued Capital and MCap
Based on 1,770,239,507 issued shares the market capitalisation is $A144.6 billion.
9.4 Vanguard Total World Stock ETF 7636:
The stock was one of 7636 global stocks selected by Vanguard Total World Stock ETF (VT). As at Jul 31, 2019, the Vanguard Total World Stock ETF held 585,033 shares worth $US33,060,799 or 0.19% by value of the ETF's portfolio [Ranked 74 out of 7636 by value and 1 out of 243 for Australia].
Contact: (02) 9378 2000
Physical Address: Ground Floor, Tower 1, 201 Sussex Street, SYDNEY, NSW, AUSTRALIA, 2000
Exchange: Australian Securities Exchange
Business Sector: Banking & Investment Services
Industry Group: Banking Services
Economic Sector: Financials
AU:CBA; ASX:CBA; AX:CBA; 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.