Are BEN shares worth considering in December?

Core Viewpoint - Bendigo & Adelaide Bank Ltd's share price is under scrutiny as ASX investors attempt to establish a price target for the company [1] Group 1: Market Context - Australia's major banks constitute approximately 30% of the share market by market capitalization, highlighting their significance in the financial landscape [2] - The popularity of ASX bank shares has been notable since the early 1990s, particularly following a recession and high mortgage interest rates exceeding 15% [2] - Banks are generally perceived as being 'implicitly' protected from total financial collapse, as their failure would pose significant political challenges [2] Group 2: Valuation Methods - The Price-to-Earnings (PE) ratio is a common metric used to evaluate a company's share price relative to its earnings per share [3] - Investors can utilize intuition regarding PE ratios, compare them with other banks or sector averages, or apply a multiple to the earnings per share to derive a valuation [4] - Bendigo & Adelaide Bank Ltd's current share price is $10.42, with an earnings per share of $0.87, resulting in a PE ratio of 12x, which is below the banking sector average of 19x [5] Group 3: Dividend Valuation - The Dividend Discount Model (DDM) is a robust method for valuing banking sector companies, relying on 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), and it is advisable to calculate with various growth and risk assumptions [8] - Using a blended growth rate and risk rate between 6% and 11%, the average valuation for Bendigo & Adelaide Bank shares is estimated at $13.32, with an adjusted dividend leading to a valuation of $13.75 [10] Group 4: Gross Dividend Valuation - Considering fully franked dividends, the valuation based on a gross dividend payment of $0.93 results in a share price valuation of $19.64 [11] Group 5: Additional Considerations - The analysis of Bendigo & Adelaide Bank Ltd should also consider net interest margins, regulatory challenges, and the management team's effectiveness [13] - Company culture is an important factor in long-term investment decisions, although no company achieves a perfect culture [13]