The Westpac Banking Corp (ASX: WBC) share price has returned to trade after the Christmas break on a positive note.
At one stage the banking giant's shares were up as much as 2% to $24.30. They have now given back a lot of these gains but are still 0.5% higher at $23.94.
While this is positive, it is worth noting that its shares are still down almost 25% from their 52-week high of $31.74.
Should you invest?
While I don't expect investor sentiment to shift positively in the immediate term, I do think there's a chance that it will improve in February when the Royal Commission final report is released.
If this report contains no nasty surprises, then I expect investors will return to the banks to take advantage of the low multiples that they trade on.
Westpac, for example, is trading significantly lower than its 10-year average price to earnings and price to book ratios.
In addition to this, the bank's shares currently offer a trailing fully franked 7.8% dividend. This is one the biggest on offer on the market right now and greater than those on offer from rivals Australia and New Zealand Banking Group (ASX: ANZ) and Commonwealth Bank of Australia (ASX: CBA).
Incidentally, I'm not the only one that thinks Westpac's shares are in the buy zone. A recent note out of Goldman Sachs reveals that its analysts still have a buy rating and $32.82 price target on Westpac's shares.
According to the note, the broker believes the bank is well positioned to manage margin headwinds from mortgage competition and was pleased to see Consumer Bank deposits rising strongly in the second half of FY 2018.
Combined with its forward PE of under 11x earnings and hefty dividend yield, the broker believes there could be meaningful upside for its shares over the next 12 months.
