The National Australia Bank Ltd. (ASX: NAB) share price has fallen 24.2% lower in 2020 but is the ASX bank share in the buy zone?
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Why the NAB share price has slumped 24.2%
ASX bank shares were under real pressure during the February/March bear market. Investors panicked with many thinking that bank balance sheets could be stressed by mass loan defaults across the economy.
However, as we now know, this hasn't proven to be the case. A combination of record government stimulus measures and a better-than-expected pandemic response has left the Aussie banks in a solid position.
So while the NAB share price is down 24.2%, it could have been much worse. The real question is whether or not NAB is a cheap buy at its current valuation.
Is NAB a cheap buy right now?
In order to determine whether the NAB share price is cheap, it pays to compare it to some of its peers.
The Westpac Banking Corp (ASX: WBC) share price is down 25.0% this year while Commonwealth Bank of Australia (ASX: CBA) shares have fallen 14.0%.
If we use the S&P/ASX 200 Index as a benchmark, which is down 11.1% for the year, then all 3 of these ASX 200 bank shares are underperforming in 2020.
While the big four are similar, it's not as simple as saying that because NAB's share price has fallen more than CommBank's has, it's an automatic buy.
NAB trades at a price-to-earnings (P/E) multiple of 16.8 times. Compared to CommBank which is at 12.46 and Westpac at 13.64, this would appear to make NAB a touch expensive.
It's also true that NAB is yielding 6.1% right now compared to the higher-paying Westpac and CommBank yields of 9.6% and 6.3% respectively.
Of course, dividend yields can be misleading, especially with the ASX banks currently holding back on distributions under APRA's orders.
However, from what I can see, the NAB share price isn't a cheap buy right now. ASX bank shares, in general, could be undervalued, but I don't think NAB is a real stand-out at $18.67 per share.
