NAB share price and dividend outlook: Q1 earnings preview
We examine some of the key things investors should know before the commercially inclined bank reports its quarterly results next week.
When will the bank report its latest results?
The National Australia Bank (NAB) is set to report its latest round of quarterly results on 16 February, 2020.
While CBA recently reported their interim results and dividend, with NAB, ANZ and WBC all set to report quarterly results in February, it is unlikely investors will gain much further clarity on the remaining big four’s dividend outlook in the near-term.
On this front, analysts from Morgan Stanley said ‘We'd be surprised if any of the major banks provide dividend guidance at their 1Q21 trading updates.’
NAB share price rises, analysts remain upbeat
Despite COVID-19 causing significant uncertainty for Australia’s economic outlook, the NAB share price has performed strongly over the last six months, rising approximately 36% in that period.
On a more granular level, in the last 3-month period the stock has risen 17.28%, in the last 1-month period it has gained 6.48% and in the last 5-day period it has fallen close to 1%.
Despite that strong near-term performance, analysts continue to favour the stock, with NAB commanding and Overweight rating on average, according to the Wall Street Journal (WSJ). Of the 13 analysts covering the stock, 8 rate it a buy, 1 rate it Overweight, and 4 rate it a hold, also according to the WSJ.
Looking back at NAB’s most recent results, the bank reported significantly lower cash earnings and dividends for the full-year in FY20. Overall, NAB reported full-year statutory net profits of $2,559 million, cash earnings of $3,710 million, down 36.6% on a year-over-year basis, a 30 cents per share fully-franked final dividend, and reported a CET1 ratio of 11.47%.
Looking at some of the key fundamental expectations from one investment bank in particular, analysts from Morgan Stanley said they expected NAB to report the following quarterly (Q1) results:
- Impairment charges of approximately $350 million
- A CET1 ratio of approximately 11.5%
- Revenue is expected to fall around 2.5%, while expenses are anticipated to rise about 1.5%
- Cash earnings, when excluding notable items, are expected to come in at approximately $1.39 billion
What’s the current trend?
From a technical perspective, IG market analyst, Kyle Rodda recently wrote:
‘NAB shares have been relatively slower to recover compared to other members of the Big 4, mostly owing to the bank’s heavy exposure to business lending. Never the less, the share price’s trend is undoubtedly bullish, with momentum strong and trending upwards.’
Mr Rodda added that:
‘After breaking resistance at around $25.00 recently, the pre-pandemic highs for the stock come into view now at around $27.30.’
This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.
Live prices on most popular markets