The Commonwealth Bank of Australia (ASX: CBA) share price has been very kind to ASX investors for a long time now.
Although CBA shares have retreated around 7% from the new all-time high of $106.57 that we saw last month, they are still up by 17.95% year to date and 35.82% over the past 12 months.
This ASX bank is also up around 70% from the lows it reached during the coronavirus-induced market crash last year. That’s all based on yesterday’s closing CBA share price of $98.78 a share.
But it’s CommBank’s performance over the past 3 months that has been especially interesting. The CBA share price has returned 12.5% since mid-April, better than any of the other major ASX banks. Far better, in fact.
Take the Westpac Banking Corp (ASX: WBC) share price. While CBA returned a very healthy 12.5% return over this period, Westpac shares instead delivered a loss of 0.24%. That’s based on Westpac’s closing share price of $25.27 yesterday.
So why such a large gap here? A gain of 12.5% over 3 months is a big deal when you’re talking about a $175 billion company.
CBA share price tops ASX banks over past 3 months
Well, for starters, it’s worth noting CBA enjoys a significant scale advantage over its big four banking brethren. CBA currently has a market capitalisation that is close to double its nearest rival. This happens to be Westpac, which is currently valued at $92.7 billion.
Scale matters in banking, and CommBank’s advantage here is probably conducive to the higher price-to-earnings (P/E) valuation multiple the CBA share price currently enjoys over the other ASX banks.
Another notable factor is CBA’s massive cash buffer. As my Fool colleague Brendon Lau pointed out on Monday, CBA “has the best balance sheet of the group (the other ASX banks)”. As he noted, this means CBA is in a better position to deliver higher dividends, and maybe even share buybacks, in the short to medium-term future.
Banking investors have probably noticed this over the past 3 months in particular. Thus, there might be some buying pressure stemming from here.
Finally, it’s worth taking into account the sale of CBA’s general insurance business to Hollard Group, which was set in motion last month. Commonwealth Bank will receive $625 million in cash upfront, with additional cash available “upon achieving certain business milestones”.
Will the good times roll for CBA shareholders?
After a very healthy 3 months, where to now for the CBA share price? Well, one broker who thinks the best may be behind CBA, at least for now, is investment bank, Goldman Sachs.
Goldman currently has a ‘sell’ rating on CBA shares, with a 12-month CBA share price target of $80.26. Goldman’s pessimism is one-dimensional — valuation concerns. The investment bank simply thinks CBA shares are priced too generously compared to its peers. Its $80.26 share price target implies a potential downside of 18.8% over the next 12 months.
At the current CBA share price, the ASX bank has a market capitalisation of $175.25 billion, a price-to-earnings (P/E) ratio of 22 and a trailing dividend yield of 2.51%.