The S&P/ASX 200 Index (ASX: XJO) has just capped off one of its best months of the year over July. The month just gone saw the ASX 200 rise by a solid 4.2%, which is certainly an above-average metric for ASX 200 shares. But let's talk about what happened with National Australia Bank Ltd (ASX: NAB) shares.
Although the ASX 200 had a top time over July, NAB shares fared even better. The ASX 200 bank stock started the month priced at $36.23 a share. But by the time trading wrapped up for July, NAB had finished up at $38.58. That's a gain worth a healthy 6.49%.
Not bad for just one month, especially considering NAB's current annual dividend yield is sitting at 4.42%.
There wasn't any significant news out of NAB in July that might easily explain this positive outlook. At the start of the month, we discussed how some NAB executives had recently picked up additional tranches of shares, which may have helped boost investor sentiment over July.
NAB also continued to buy back its own shares with gusto over July, which would have done nothing to hurt the bank's stock price.
However, NAB's gains over July weren't an outlier amongst its peers. Last month was fantastic for almost every ASX bank stock.
For example, the Westpac Banking Corp (ASX: WBC) share price rose by 9.5% in July and finished the month at a multi-year high. Commonwealth Bank of Australia (ASX: CBA) shares shot up 7.94% and hit several new record highs of their own.
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What's next for NAB shares?
After such a strong month for NAB, many investors might be in a celebratory mood and wondering what might be next for the ASX 200 bank.
Unfortunately for those investors, most ASX brokers seem to be beginning to unify in their views that the ASX bank shares, including NAB, are starting to look expensive.
Last month, my Fool colleague James took stock of the views of ASX broker Bell Potter on the bank shares.
Here's some of what that broker had to say:
In our view, the banks are too expensive at current levels. Our recommendation is an underweight to the banks as we expect the sector is due a correction without a significant change to the earnings outlook…
In our view, bank sector valuations are expensive. Most valuation metrics point to elevated prices..
The elevated P/B ratio indicates that current market prices may exceed the underlying value of these banks. Above-average multiples could be justified if earnings growth is expected to be above average, but consensus has earnings going backwards in FY25 and low single growth in FY26.
"Due for a correction" is probably the last thing bank investors want to hear right now. However, we'll have to wait and see what happens. After all, brokers have been telling investors to sell CBA shares for years now, yet that bank has gone on to hit new record high after new record high.
Let's see how the NAB share price fares over August.
