Are ANZ shares worth considering in January?

Core Viewpoint - ANZ Banking Group's share price is under scrutiny as investors attempt to establish a valuation for the company amidst fluctuating market conditions [1][2] Valuation Methods - The PE ratio is a common method for valuing bank shares, comparing the share price to earnings per share [3] - Investors can use intuition, compare with sector averages, or apply a PE multiple to earnings to determine valuation [4] - ANZ's current share price is $36.42, with an earnings per share of $2.15, resulting in a PE ratio of 16.9x, lower than the sector average of 19x [5] Dividend Discount Model (DDM) - DDM is a traditional valuation model that uses dividends to estimate share value, factoring in a risk rate [6][7] - The formula for DDM is Share price = full-year dividend / (risk rate – dividend growth rate) [8] - Using a blended growth rate and risk rate between 6% and 11%, the average valuation for ANZ shares is $35.10, with an adjusted dividend leading to a valuation of $35.74 [10] Growth and Risk Analysis - Different growth and risk rate scenarios yield varying valuations, with a 2% growth rate and 6% risk rate suggesting a valuation of $42.25, while an 11% risk rate drops it to $18.78 [11] Additional Considerations - Evaluating net interest margins and regulatory responses is crucial for understanding ANZ's financial health [12] - Company culture is also a significant factor in long-term investment decisions, with ANZ's culture rated below perfect [12]