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Why is the CBA share price falling the hardest of the big four today?

CBA shares are set to finish the week lower.

Posted by
Aaron Teboneras
Author bio Aaron Teboneras is an ASX investment writer with a background in business, marketing and finance. He has been a contributor to The Motley Fool since 2020, covering market news, company announcements, broker views and financial results. Aaron’s previous notable appointments include National Australia Bank, and Computershare where he discovered his passion for the Australian sharemarket. Aaron has been investing for almost 20 years, using both fundamental and technical analysis to find opportunities. Aaron completed a Technical Analysis course with Mint Analysis in 2022 and is currently studying Training and Assessment. Outside the market, he has travelled to more than 45 countries and enjoys trekking, meeting new people and seeing different parts of the world. Areas of expertise ASX growth shares Founder-led companies Company announcements and financial results Fundamental and technical analysis Education Bachelor of Business from RMIT University Social media LinkedIn Instagram Favorite investment quote “If you don't find a way to make money while you sleep, you will work until you die.” — Warren Buffett
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Key points
  • The CBA share price is lagging behind its peers, falling 1.85% to $93.68 today 
  • The company has a P/E ratio of 17.83 which is the most expensive out of the big four 
  • Macquarie believe CBA shares are fully valued, but Morgan Stanley has a bearish outlook on the bank 

The Commonwealth Bank of Australia (ASX: CBA) share price is being hit the hardest out of its peers today.

The banking giant's shares are receding 1.85% to $93.68 amid the S&P/ASX 200 Index (ASX: XJO) diving 2.14% today.

When looking at the other major banks, CBA shares aren't faring quite well.

The National Australia Bank Ltd (ASX: NAB) share price is dropping 1.68%, while Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) are sinking 1.5% and 1.23%, respectively.

A woman dressed in red and standing in front of a red background peers thoughtfully at a piggy bank in her hand.

Image source: Getty Images

How is the CBA share price valued?

A catalyst for the CBA share price performing worse than its peers today could be the premium level its currently trading at.

Currently, CBA has a price-to-earnings (P/E) ratio of 17.83 which is higher than its peers. This means investors are paying $17.83 for every $1 of earnings the company makes.

In comparison, NAB has a P/E ratio of 15.11, Westpac is on 15.97, and ANZ with 10.62.

The long-term trend for the P/E ratio of the Australian market is around 15, although it has moved around a bit since COVID-19.

Measuring P/E ratios against other companies in the sector tells an investor how expensive the stock is trading at.

This is calculated by dividing the current share price by the earnings the company made over the last 12 months.

What do the brokers think?

The team at Macquarie raised their 12-month price target for the bank's shares by 12% to $90.50 apiece. It appears that the broker believes that CBA is fully valued at the moment, with investors agreeing alike given the current share price.

On the other hand, analysts at Morgan Stanley had a slightly more bearish take, raising its rating by 0.6% to $83.50.

Based on the bank's share price, this implies a downside of roughly 12% from where it trades today.

CBA share price summary

Adding to the already tough month it has been, the CBA share price is down 7% over the last 12 months.

When looking at year-to-date, its shares are also down 7%.

CBA commands a market capitalisation of about $162.22 billion, making it the second largest company on the ASX.

Motley Fool contributor Aaron Teboneras 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 recommended Westpac Banking Corporation. 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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