Are NAB shares worth considering in September?

Core Viewpoint - National Australia Bank Ltd (NAB) share price is under scrutiny as ASX investors attempt to establish a price target for the company [1][2] Valuation Methods - The PE ratio is a key metric for valuing bank shares, comparing the share price to yearly earnings per share [3] - Three methods to utilize the PE ratio include intuitive buying/selling based on PE levels, comparing NAB's PE ratio with peers like ANZ, and calculating a sector-adjusted PE valuation [4] Current Valuation Metrics - NAB's current share price is $43.79, with earnings per share (EPS) of $2.26, resulting in a PE ratio of 19.4x, slightly above the banking sector average of 19x [5] - A sector-adjusted PE valuation based on the average PE ratio yields a valuation of $44.05 per share [5] Dividend Valuation - The Dividend Discount Model (DDM) is a robust method for valuing banks, using recent or forecasted dividends and a risk rate [6][7] - The formula for DDM valuation is Share price = full-year dividend / (risk rate – dividend growth rate) [8] - Using last year's dividend of $1.69 with various growth and risk assumptions results in a valuation range, with a base valuation of $35.74 and an adjusted valuation of $36.16 [10] Gross Dividend Valuation - Considering fully franked dividends, using a forecast gross dividend payment of $2.44 leads to a valuation of $51.66 [11] Sensitivity Analysis - Valuation outcomes vary significantly based on growth and risk rates, with a range of potential valuations provided for different scenarios [12] Additional Considerations - Investors should assess net interest margins, regulatory impacts on non-interest income, and the management team's effectiveness when evaluating NAB [13]