Is the Australia and New Zealand Banking Group (ASX: ANZ) share price a buy?
The ANZ share price is also suffering in this market sell off with it currently down 1.8%, which isn’t anywhere near as bad as many other ASX shares like Appen Ltd (ASX: APX) WiseTech Global Ltd (ASX: WTC) which have seen falls of over 10% over the past two days, but 2% is still a fairly big movement for a single day.
Obviously whatever happens in the trade war between the US and China could have a serious impact on the Australian economy as they are two of Australia’s most important partners.
The strength of China helped Australia a lot during the GFC and a weak(er) China would definitely slow down Australia’s economy, which could have an impact on ANZ, its big four peers of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB).
However, ANZ seems to be performing better than some of its peers at the moment. In the 2019 half-year report ANZ reported that it grew its continuing cash profit by 2% to $3.56 billion and grew continuing cash earnings per share (EPS) by 5% to $1.248 which increased faster due to the share buy-back.
However, one of the main reasons that I’m quite wary about ANZ (and all banks) is their huge balance sheets. It doesn’t take much trouble on the balance sheet for the whole business to feel pain.
If the housing market has stopped falling then ANZ is a safer option to consider than it was at the start of the year. But I think there are better places to invest for long-term returns, even if ANZ’s forward p/e of 11 and grossed-up dividend yield of 8.5% seem attractive.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of WiseTech Global. The Motley Fool Australia owns shares of Appen Ltd and National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.