Own CBA shares? Here's what to expect when the bank reports next week

CBA continues to stir the analyst pot with experts differing widely in their projections.

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Key points
  • CBA is set to report earnings any day now and brokers have weighed in with their expectations 
  • Sentiment is mixed from the experts, with some baking in a large earnings jump, whilst others are more pessimistic  
  • In the last 12 months, the CBA share price has climbed a little under 10% into the green 

Shares in Commonwealth Bank of Australia (ASX: CBA) have gyrated in recent months, trading mostly sideways in that time after a spike in March.

However, scaling back to the start of 2022, the bank has only managed to clip a 1% gain at the time of writing, in line with the S&P/ASX 200 Financials Index (ASX: XFJ).

In fact, stripping all other ASX financials companies out of the equation and focusing solely on the banks, via the Vaneck Australian Banks ETF (ASX: MVB), the basket has secured a 2% rise on the year. This means CBA is trailing the segment.

a young boy dressed in a business suit and wearing thick black glasses peers straight ahead while sitting at a heavy wooden desk with an old-fashioned calculator and adding machine while holding a pen over a large ledger book.

Image source: Getty Images

What to expect for CBA shares next earnings?

Sentiment is mixed on what the bank might report in its upcoming earnings report, with viewpoints ranging from a large pullback in profits to a substantial jump in after-tax income.

Analysts Matt Ingram and Jack Baxter of Bloomberg Intelligence reckon that CBA could beat estimates by 15% "on the Reserve Bank of Australia (RBA)'s rate hike".

"CBA's 2023 profit could beat market estimates by 15% if consensus' forecast for a 165 basis point (bps) RBA cash-rate rise is realised, which we think is more likely after the central bank hiked by 25 bps to 35 bps and telegraphed more increases," the duo wrote in a recent note.

"CBA's beat may be less than ANZ and NAB due to its higher reliance on term deposits, but also due to more bullish sell-side estimates, which already forecast a 5-bp jump in margin," they added.

Meanwhile, analysts at Citi weren't as constructive in their criticism of the bank's expected earnings in their review.

The broker estimates third quarter cash earnings to increase by 3%, offset by an anticipated 3% rise in operating costs, "generating 5% lower pre-provision profit growth".

Finally, if forward ratings from analysts are anything to go by, it appears the experts don't expect much juice from CBA's next earnings squeeze.

Almost 70% of coverage has it as a sell right now, whereas just 1 broker – Jefferies – has it as a buy with a $116 valuation, per Bloomberg data.

Meanwhile, at the bottom of the scale, Morgans values it at $77 per share.

The consensus price target is $94.84 from this group, suggesting there's more downside potential to come if this average number is right.

Motley Fool contributor Zach Bristow 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 Scott Phillips.

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