CBA interim results preview: share price and dividend outlook

We look at four key things traders and investors should know before CBA reports its half-year results to the market this week.

When will CBA report its latest results?

The Commonwealth Bank of Australia (CBA) is set to report its first-half (FY21) results on Wednesday, 10 February.

Included in these first-half results will be an announcement concerning the bank’s all-important interim dividend. We look at forecasts for the interim dividend in more depth below.

Analysts remain bearish heading into the H1

Despite the CBA share price rallying strongly in the last six months as well as retaining a healthy dividend in 2020, on average, analysts remain downbeat on the stock.

According to the Wall Street Journal (WSJ), CBA, on average, has an Underweight consensus rating, with 6 Sell recommendations, 2 Underweight recommendations, 5 Hold recommendations and 1 Buy recommendation.

The average price target on CBA stands at $77.97 per share, according to the WSJ, suggesting that analysts, on average, believe the stock has run ahead of its fundamentals.

CBA share price: Analysts and the markets disagree

Despite analysts remaining underwhelmed by CBA, the stock has performed well over the last six-month period, rising 39.75% from the lows recorded in September 2020.

Looking at the share price performance on a more granular level, over the last 5-day period, as of 1:00PM on Tuesday, 9 February, CBA has risen 1.10%, over the last 1-month period it has gained 2.23%, over the last 3-month period it has added 24.51%, and over the last 6-month period it has rallied 22.40%.

These positive share price moves seem to suggest that the market, made up of retail investors and institutional players, disagree with the sell-side’s bearish view on the biggest of the big four banks.

CBA dividend outlook: Four key forecasts

Share price gyrations and sell-side price targets aside, given the historically high yields of Australia’s big four banks, investors will likely be keenly focused on CBA’s interim dividend announcement as well as any future guidance around dividend payments during Wednesday’s interim results.

Looking at the expectations around CBA’s capital management strategies, analysts from Morgan Stanley said ‘We forecast a dividend of 155c, but no share buyback.’

‘In our view, any commentary on the medium-term payout ratio would be important,’ the investment bank added.

Citi analysts were more optimistic than Morgan Stanley, forecasting CBA to pay an interim dividend of 165 cents per share – moderately ahead of consensus estimates.

The broader outlook, both economically and for the banks has indeed improved in recent times, leading Citi analysts to point out that:

‘The lack of bad debts through the September quarter and a rapidly improving macro situation through the December quarter leaves us wondering whether bad debts, dividends and share prices will all surprise together.’

Finally, Macquarie estimates that the bank will pay a 1H dividend of 175 cents per share; while UBS said they expect CBA’s interim dividend to come in at 153 cents per share.

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