The easiest way to value the BEN share price

Core Viewpoint - The article discusses the valuation of Bendigo & Adelaide Bank Ltd (BEN) shares, emphasizing the importance of using multiple valuation methods to assess whether the current share price of approximately $12.60 represents good value for investors [1][11]. Valuation Methods - The article outlines two basic valuation tools: the Price-to-Earnings (PE) ratio and the Dividend Discount Model (DDM) [2][7]. - The PE ratio compares a company's share price to its earnings per share, with a current PE ratio for BEN calculated at 14.5x, compared to the banking sector average of 19x [4][6]. - The DDM uses expected dividends to arrive at a valuation, with the last full-year dividend for BEN being $0.63, leading to a valuation of $13.32 under certain assumptions [9][11]. Sector Context - ASX bank shares constitute about one-third of the Australian stock market by market capitalization, indicating their significance in the financial sector [2]. - The article suggests that ASX bank shares, including BEN, are popular among yield-seeking investors due to their stable dividend history [3][7]. Dividend Valuation Insights - The DDM valuation can be adjusted based on different growth and risk rates, with a gross dividend payment forecast of $0.93 leading to a valuation of $19.64 for BEN shares [12]. - The article emphasizes the importance of considering fully franked dividends, which can enhance the valuation for eligible shareholders [12]. Analytical Practices - It is recommended to analyze at least three years of annual reports and management communications to form a comprehensive understanding of the company [14]. - Engaging with diverse analytical perspectives is encouraged to gain deeper insights into the company's performance and valuation [14][15].