The Westpac Banking Corp (ASX: WBC) share price is on course to make it two consecutive days of gains on Tuesday.
At the time of writing the banking giant's shares are up 1% to $26.92.
Why are Westpac shares pushing higher?
Investors appear to have responded positively to Westpac's full year results release on Tuesday.
For those that missed it, Westpac posted cash earnings of $8,065 million in FY 2018. While this was flat on FY 2017's result, it was slightly ahead of the market's expectations.
The bank also declared a final dividend of 94 cents per share, bringing its full year dividend to a total of $1.88 per share.
Should you invest?
I thought that this was a solid result from Westpac, especially considering the negative impacts of a weakening housing market, the bank levy, and the Royal Commission.
While things certainly will not be easy in FY 2019, I still believe that the bank will be able to grow its earnings at a modest rate.
Because of this, the low multiples that its shares trade on, and its generous dividend yield, I think Westpac's shares are in the buy zone right now.
And I'm not alone. A note out Goldman Sachs reveals that it has retained its buy rating on the bank's shares. However, it has cut the price target on them to $32.84.
This lower price target still implies potential upside of approximately 22% over the next 12 months excluding dividends.
While the broker does see risks such as Westpac's higher exposure to interest-only mortgage lending and the NSW property market, it believes the bank's liquidity and funding position leaves it well-positioned to manage margin headwinds from mortgage competition.
In addition to this, the broker remains positive on the bank due to its CET1 ratio of 10.6% and the fact that its shares are priced at just 11x estimated forward earnings and offer a 7% dividend yield. These compare very favourably to its 15-year averages.
Overall, I agree with Goldman on this and think Westpac is well worth considering along with Australia and New Zealand Banking Group (ASX: ANZ) and ahead of Commonwealth Bank of Australia (ASX: CBA).
