price of ANZ Banking Group (Right now, you could probably use Google or another data provider to see theof ASX: ANZ ) is around $36 per share. But what are ANZ shares really worth? How to get to an share valuation is one of the more popular questions our senior investment analysts get asked by Australian investors, especially those seeking dividend income. It’s not exclusive to ANZ Banking Group, of course.National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA) are also very pop ...

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 key metric for valuing bank shares, comparing share price to earnings per share, with a common approach being to buy shares if the PE is low and sell if it exceeds a certain threshold [3][4] - ANZ's current share price is $33.19, with an earnings per share of $2.15, resulting in a PE ratio of 15.4x, which is below the banking sector average of 19x [5] - A sector-adjusted PE valuation for ANZ, based on the average PE ratio, is calculated to be $41.81 [5] Dividend Discount Model (DDM) - The DDM is a robust valuation method for banks, using recent or forecasted dividends and a risk rate to estimate share price [6][7] - The formula for DDM 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 ANZ shares is $35.10, which increases to $35.74 with an adjusted dividend payment of $1.69 [10] Growth and Risk Analysis - Different growth and risk rate scenarios yield a range of valuations, with a 6% risk rate and 2% growth rate suggesting a valuation of $42.25, while an 11% risk rate and 4% growth rate suggest a valuation of $24.14 [11] - The analysis emphasizes the importance of understanding net interest margins, regulatory challenges, and management culture when evaluating bank shares like ANZ [12]