2025 was a year of extremes for Commonwealth Bank of Australia (ASX: CBA) shares. And it came in two halves.
The first half of 2025 saw the incredible run that this ASX 200 bank stock began in 2024 continue with gusto. Between January and June, Commonwealth Bank soared anther 20% or so, topping out at a new all-time record high of $192 a share mid year. But ever since then, investors have been running out of puff.
By the end of the year, CBA had fallen to $160.57 a share. The slump has continued into 2026, with CBA shares commanding a price of just $149.13 a share at the time of writing. That price represents a 22.3% drop from the bank's record high in June.
CBA's descent has also resulted in an ignominious loss of its status as the largest stock on the S&P/ASX 200 Index (ASX: XJO). As we documented this week, BHP Group Ltd (ASX: BHP) has nabbed CBA's crown that it had held for about 18 months.
So one of CBA's more forgettable periods in recent years.
But what of the future? Where might CBA shares be five years from today?
Of course, it's impossible to know where any index, let alone an individual stock, will be at any given point in the future. But making a five-year prediction is particularly daunting.
Image source: Getty Images
Where will CBA shares be in 2031?
Saying all of that, I have an idea. As I've written about before, I think the performance of CSL Ltd (ASX: CSL) is a canary in the coalmine or sorts for CBA.
Over the five years to 2020, CSL went on one of the ASX's most spectacular runs. The company jumped from about $100 a share in 2015 to the all-time high of $342.75 we saw in early 2020. That run transformed CSL into one of the ASX's largest stocks. However, sentiment got carried away. Investors priced in far too much growth and were left holding the bag. CSL shares have, to this day, never reclaimed that all-time high and currently sit at $183.53. It's a classic reversion to the mean, and I think this is what lies in wait for CBA shares.
As it stands today, CBA trades on a price-to-earnings (P/E) ratio of 24.7, well above what most banks trade at. And not just on the ASX, but around the world. Further, this lofty valuation has dampened the appeal of what draws most investors to an ASX bank stock in the first place – the dividend yield. As it currently stands, CBA trades on a yield of 3.25%. That's well below what investors used to expect from an ASX bank, and also substantially under what the other ASX banks will pay out right now.
This bank is not growing at what one could call a rapid rate, either. Last year's full-year earnings had CBA report a 4% rise in cash net profits to $10.25 billion. I would be shocked if we see anything materially better over the next few years, given CBA's size and maturity.
Foolish takeaway
So all in all, I believe CBA shares will be around the same valuation they are today in five years' time. And that's an optimistic projection. I wouldn't be surprised to see CBA 'do a CSL' and go backwards either. At the end of the day, the growth that would justify a higher CBA share price going forward just isn't there, and the bank will probably revert to its own mean given enough time. I could be wrong, of course. But I wouldn't be buying CBA shares today regardless.
