US Markets down again. However, ASX 200 futures are not down all too much. I have a feeling today's trading day for CBA might be green despite the big USA sell off.
CBA is already more expensive than Google. But it's getting close to Microsoft whose forward PE ratio is 30. Microsoft have done 30%+ ROE every year going back to 2018. Its a company that sells new products & finds new revenue streams, while legacy products continue to sell due to networking effect - example every major business is plugged into the suite products, so new businesses need to buy them too. Microsoft is investing in AI and is one of the big players. Yet, its only marginally more expensive than CBA despite a vastly superior outlook. Marginally more expensive despite selling its array of products to the world, where as CBA is limited to Australia.
Microsoft is up 12% for the past year. CBA up 50%. 12 months ago CBA would have been trading at big discount to Microsoft due to the reasons I stated above - Microsoft is a much better company with better earnings potential and capacity to participate in the AI boom. Yet now, CBA and Microsoft are drawing parallel from an earnings perspective. I cannot even begin to understand what people think the future of CBA's earnings will be outside incremental increases of between 3-5% and an ROE of between 10-15%.
The enthusiasm for this bank stock is bordering on utter insanity.
CBA Price at posting:
$155.13 Sentiment: Sell Disclosure: Not Held
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