The Commonwealth Bank of Australia (ASX: CBA) share price has been one of the many ASX victims of the share market volatility we have seen over the last few weeks. CBA shares were going for over $90 on Valentine's Day, but it seems the market fell out of love with Commonwealth Bank soon after.
Today, CBA shares are asking just $76.56 (a 16% turnaround from Valentine's Day), which is below what the market has been willing to pay over the last twelve months on average.
Why CBA shares dipped in February
Well, the general market sentiment hasn't helped of course. Over the last two weeks, the S&P/ASX 200 (INDEXASX: XJO) lost around 11% of its value peak-to-trough (although we are back up another 1.7% today). Virtually all ASX shares have been under selling pressure as a result.
But CommBank has fallen harder than most ASX shares during this time. This might be partly due to the bank going ex-dividend on February 19 – which would have knocked a few percentage points off the share price.
But investors might also be realising that CommBank was priced a little too high for its growth prospects, which don't look pretty in this era of low interest rates. In fact, Commonwealth Bank's profits went backwards last year, and there is a strong chance it might back that up again in 2020.
Are CBA shares a buy today?
At the current share price, CommBank shares are trading at a price-to-earnings ratio of 13.89 and a trailing dividend yield of 5.63% (8.04% grossed-up with full franking). That's both the highest P/E ratio and lowest dividend yield out of the 'big four' ASX banks.
I think Commonwealth does deserve to trade at a premium to the likes of Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB). It's managed to keep its dividends in check (unlike the others) and also arguably has the strongest business fundamentals. Its sheer size doesn't hurt either.
But it's the lack of growth that doesn't bode well for me and that's why I don't think CommBank is a buy, even at today's prices. I would want the yield to be substantially higher for this kind of investment and I think there are better places to have your money in today's market.
Foolish takeaway
Commonwealth Bank remains an ASX institution and also a solid stock to have in a diversified, dividend-focused portfolio. However, I don't think the current price is attractive enough to warrant opening or adding to your CBA position.
