The Commonwealth Bank of Australia (ASX: CBA) share price is trading flat on Thursday.
Which isn't a bad outcome considering the S&P/ASX 200 Index (ASX: XJO) is down 0.25% at the time of writing.
This means the CBA share price remains up almost 27% since the start of the year at $106.09.
Image Source: Commonwealth Bank
Is the CBA share price good value?
One leading broker that still sees a lot of value in the CBA share price is Bell Potter.
According to a note from last week, the broker has retained its buy rating and $118.00 price target on the bank's shares.
Based on the current CBA share price, this suggests there's still potential upside of 11.2% for its shares. And if you include the $4.06 per share fully franked dividend the broker is forecasting in FY 2022, the potential return stretches to 15%.
What did the broker say?
Bell Potter notes that CBA will soon be releasing its first quarter update and is expecting a solid result.
It commented: "Net interest income is expected to be up by around 3%. This is based on higher overall banking volumes (back to the traditional business of mainly mortgage and retail consumer loans) that more than offset a fall in NIM of around 3bp (to 2.01%). The main drivers are thus home loans [+4% for Retail Banking Services (RBS), +3% for Business Bank/Institutional Banking and Markets (BB/IBM)] and other loans (+4% for RBS although BB/IBM was negative)."
Overall, this is expected to lead to the bank reported an unaudited cash NPAT of ~$2.36 billion for the quarter.
Valuation
Bell Potter also explained why it thinks the CBA share price is good value at the current level.
It uses a combination of earnings multiples and a sum of the parts (SOTP) valuation to come up with its price target.
The broker said: "We have, however, moved the prospective (FY22) PE multiples around (and thus Sum-of-Parts) to better capture the various segments: RBS 17.0x; BB/IB&M 18.0x; and New Zealand 17.0x. The composite valuation is thus $117.22, being an equal measure of: DCF $186.5bn; dividend yield $197.9bn; ROE $198.2bn; and Sum-of-Parts $171.2bn. There is also surplus capital of $11.6bn to top it off. The price target is the same as before, being $118.00 per share, and likewise the Buy rating based on a 12-month TSR of greater than 15%."
