CBA (ASX:CBA) share price outperformed Westpac over the past 3 months

Commonwealth Bank has been a great performer in recent months. But will the good times continue to roll?

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

boy giving thumbs up to $100 notes

Image source: Getty Images

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%.

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Bank Shares

Lines of codes and graphs in the background with woman looking at laptop trying to understand the data.
Bank Shares

Why this ASX bank stock is tumbling today after earnings

A 20% profit drop seems to unsettle investors.

Read more »

Bank building in a financial district.
Bank Shares

Bank of Queensland half-year 2026: profit falls, dividend steady as revenue rises

Bank of Queensland half-year 2026 results: profit down 20%, revenue up 4%, dividend steady at 20 cents.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Bank Shares

3 reasons to buy Westpac shares today

Westpac shares have faced several ups and downs already this year, but I still think the ASX bank stock has…

Read more »

A man in his 30s with a clipped beard sits at his laptop on a desk with one finger to the side of his face and his chin resting on his thumb as he looks concerned while staring at his computer screen.
Bank Shares

Forget CBA shares — here are 2 ASX bank shares I'd rather own right now

CBA shares are trading in the green again today, but I'd still pick these two ASX bank shares instead.

Read more »

Nervous customer in discussions at a bank.
Bank Shares

Why are NAB shares sinking 4% on Monday?

Let's see what NAB has announced on Monday.

Read more »

A woman wearing a yellow and white striped top and headphones plays excitedly with her phone.
Bank Shares

5 reasons to invest $500 in CBA shares

For long-term investors, reliability and scale can matter more than short-term valuation.

Read more »

Australian dollar notes and coins in a till.
Dividend Investing

How many ANZ shares do I need to buy for $10,000 a year in passive income?

ANZ shares have a lengthy track record of paying two dividends a year.

Read more »

View of a business man's hand passing a $100 note to another with a bank in the background.
Bank Shares

In the midst of economic turmoil, what does Morgan Stanley say the ASX banks are worth?

The economic headwinds are building.

Read more »