The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.
The MACD is still below zero, however the MACD is above the signal line (on the hourly chart); highlighting momentum is higher in the short-term
Looking at sentiment from a top down perspective I feel the failure for the S&P 500 to pullback on Friday despite a poor headline US payrolls report is very interesting and I wouldn’t be surprised to see a further rally this week in global markets.
In terms of drivers for CBA, aside from the global back drop it’s all about CBA’s 1H14 earnings on Wednesday. ANZ hit the market on Tuesday with its Q1 trading update, so naturally there will be some trends in this report we can extrapolate out for CBA. However there is no analyst’s conference attached to the update, so the market will be fully focused on Wednesday’s earnings.
In terms of actual 1H numbers, the consensus in the market is that we should see cash NPAT of A$4.17 billion (9 analysts), while they are expected to pay an interim dividend of A$1.80, which is a 9.7% increase from the same period last year.
In terms of revenue analysts expect a 7% increase on the year. However the best gauge of profitability is generally net interest margins and for CBA they are expected to print 2.14%.
Return on equity is expected to increase 70 basis points to 18.9% (against 1H 13) and is a very healthy number, showing good efficiencies in the business
In terms of kickers, it’s interesting to note that CBA has beaten expectations in cash earnings in four of the past five years, while its dividend has been stronger than forecast in all of the past three earnings reports
Valuation wise, the forward price to earnings ratio is trading on a 11% premium to its five-year average, however at 14.5x it’s has fallen from trading on 15.5x a few weeks ago.