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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.

Stock Summary
CurrencyAustralian Dollar (AUD) 1 AUD = 0.69 USD
Today's close (AUD)81.69
52-Week Range (AUD)61.6-82.2
SectorBank sector
Shares Outstanding1,770,239,507
Market Cap$A144.6 billion ($US99.4 billion)

Highlights in today's Report:

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

SECTION 2 TODAY'S BEARISH SIGNALS

SECTION 3 TODAY'S BULLISH SIGNALS

SECTION 4 RELATED NEWS

RECAP FROM PREVIOUS REPORTS (UPDATED AT THE LAST PRICE OF $A81.69):

SECTION 5 THE PAST WEEK

SECTION 6 ONGOING BULLISH PARAMETERS

SECTION 7 ONGOING BEARISH PARAMETERS

SECTION 8 SUMMARY FINANCIALS

SECTION 9 CORPORATE PROFILE

SECTION 1 TODAY'S AGGREGATE VOLUMES AND PRICES

[Volume Index or VI in brackets; 1 is average]
+ ASX: CBA.ASX 2,544,920 [VI of 0.9] volume 99.82% of aggregate. Price: $A81.69.
+ Frankfurt: CWW.FRA 4,580 [VI of 3.8] volume 0.18% of aggregate. Price: EUR50.87. Using the current exchange rate of EUR1 equals 1.6243AUD, The shares are at a 1.1% premium to the close price on ASX.
+ Aggregate volume: there were 2.5 million shares of Commonwealth Bank of Australia worth $A208.3 million traded today. The aggregate volume was 0.9 times average trading of 2.9 million shares.

SECTION 2 COMMONWEALTH BANK OF AUSTRALIA BEARISH SIGNALS

2.1 Overvaluation [compared with sector average]:
Price/Earnings
+ Price/Earnings of 17.2 [14.4].
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 1.2%.
+ The relative yield of CBA, defined by its yield of 5.3%, divided by average yield of dividend yielding stocks in the All Ordinaries Index of 6.0% is 87.9%. This suggests Commonwealth Bank of Australia stock is overvalued in dividend yield terms.
Price to Book
+ Price to Book of 2.3 [1.9].

2.2 Overvaluation Indicator and rank of Commonwealth Bank of Australia in the Australian market:
DescriptionValueRank In Market
* EV/EBITDA4.9In 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.

2.4 Downtrend:
Today's Volatility:
+ 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.

Overbought/Bearish Signals:
+ 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 SIGNALS

3.1 Undervaluation [compared with sector average]:
Earnings Yield
+ Earnings yield of 5.8% is 4.7 times the 10-year bond yield of 1.23%.
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 5.6% 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:
DescriptionValueRank In Market
Cash to MCap %37.8In Top 5%

3.3 Uptrend:
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.
Past Week:
+ 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.
Past Month:
+ 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.
PV$10001-week1-month1-year
CBA.ASX1,0241,0981,282
All Ordinaries Index1,0051,0251,081

3.4 High Price Performance Indicators and rank of Commonwealth Bank of Australia in the Australian market:
DescriptionCBA ValueRank In Market
Today's Trading Turnover$A207.9 millionIn Top 1%
MCap$A144.6 billionIn Top 1%
Volatility %0.7In Top 8%

SECTION 4 COMMONWEALTH BANK OF AUSTRALIA RELATED NEWS

American 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 WEEK

5.1 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.
DayCommonwealth Bank of AustraliaClose price [AUD]Price change %Relative change %Comment
FridayHits year-high 6th time in three months82.141.00.8Top Rise; VI*=1.2
ThursdayHits three-month high81.350.90.7Price rise on rising relative strength
WednesdayIncreases strengthening above moving average price80.60.90.5Price rise on rising relative strength
TuesdayIn 4th consecutive rise, nears two-month high79.890.10.6Price rise on rising relative strength
MondayHits two-month high79.810.30.2Price rise on rising relative strength
[Volume Index (VI); 1 is average]

5.2 Volatility:
+ 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 PARAMETERS

6.1 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%.
CBAClose (AUD)Dividends (AUD)Capital Gain / (Loss) %% YieldAnnual Return %
Sep 1681.694.31216.427.4
1 Yr ago67.534.31(1.1)6.35.2
2 Yrs ago68.264.29167.323.3
3 Yrs ago58.824.2(2.1)74.9
4 Yrs ago60.094.2(1.0)6.96.0

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
YearADVT
20192.9
20182.7
20173.0
20163.1
20152.9
In the past five years, Average Daily Volume of Trading (ADVT) has increased 1.7% to 2.9 million shares.

6.7 Increased VWAP
Past five years, 12 months ended Sep 16 (AUD)
YearHigh PriceVWAPLow Price
201982.2471.6461.61
201873.7168.2461.55
201776.0269.3558.94
201668.6661.6456.1
201574.8164.2955.72
In the past five years Volume Weighted Average Price (VWAP) has increased by 11.4% to $A71.64. Based on a dynamic start date of five years ago, there have been declines in VWAP in 2 out of 5 years.

6.8 Increased Average Daily Turnover
Past five years, 12 months ended Sep 16 (AUD million)
YearAverage Daily Turnover
2019209.8
2018188.7
2017210.3
2016191.6
2015186.0
In the past five years, average daily share turnover has increased 12.8% to $A209.8 million. This suggests increased liquidity.

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 PARAMETERS

7.1 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 %]
YearEPS GrowthEBITDA Growth
Jun 18-7.5-1.8
Jun 1796.4


7.2 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.

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 FINANCIALS

8.1 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 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.

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:
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 9 CORPORATE PROFILE

9.1 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].

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