The easiest way to value the ANZ share price

Core Viewpoint - The article discusses the valuation of ANZ Banking Group shares, emphasizing the importance of using multiple valuation methods to assess whether the current share price is attractive for investors. Valuation Tools - Two primary valuation tools are suggested for assessing bank shares like ANZ: Price-Earnings Ratio (PER) and Dividend Discount Model (DDM) [2][3][7]. Price-Earnings Ratio (PER) Analysis - The PE ratio compares a company's share price to its earnings per share, with a current ANZ PE ratio of 15.2x compared to the banking sector average of 19x [4][6]. - A sector-adjusted PE valuation for ANZ, based on its earnings per share of $2.15, results in a valuation of $41.76 [6]. Dividend Discount Model (DDM) - The DDM uses expected dividends to arrive at a share valuation, with the last full-year dividend being $1.66 and an adjusted dividend of $1.69 leading to valuations of $35.10 and $35.74 respectively [9][11]. - The article suggests using a range of growth and risk rates to calculate share price, with various scenarios yielding different valuations [10][12]. Growth and Risk Rate Analysis - Different growth rates (2% to 4%) and risk rates (6% to 11%) produce a wide range of potential valuations for ANZ shares, indicating the sensitivity of the valuation to these assumptions [12]. Importance of Comprehensive Analysis - The article emphasizes the need for thorough research, including reviewing annual reports and management communication, to form a well-rounded investment thesis [13].