It’s not often we see WBC outperform CBA by 10% in a week. Both companies updated the market to varying degrees, with CBA releasing very solid FY25 results, while WBC provided a quarterly update that was slightly stronger. CBA booked earnings growth of 4.3% for the year—a good outcome for such an economically sensitive business—while WBC’s quarterly showed earnings growth of 5.6%.
While WBC’s result was a touch stronger, the main driver of the 10% performance gap came from their respective starting points. CBA was trading on a PE of 29x, nearly 4x price-to-book, and a 2.7% dividend yield. Westpac, on the other hand, was on 16x, a price-to-book of 1.7x, and a yield of around 5%. CBA’s result suddenly forced investors to ask the question: Why am I paying 29x for so little growth?
- Relativity in the market is an important concept. Buying a cheaper stock with higher growth generally makes a lot of sense.
MM remains neutral on CBA & bullish on WBC
Add To Hit List
