Group 1: Valuation of Commonwealth Bank of Australia (CBA) - The current share price of CBA is approximately $176.02, with a calculated PE ratio of 31.3x based on FY24 earnings per share of $5.63, compared to the banking sector average PE of 20x, leading to a sector-adjusted PE valuation of $114.40 [6][5] - A Dividend Discount Model (DDM) valuation suggests that using last year's dividend payment of $4.65, the share price could be valued at $98.33, and with an adjusted dividend of $4.76, the valuation increases to $100.66 [11][10] - Considering fully franked dividends, the valuation based on a gross dividend payment of $6.80 results in a share price valuation of $143.80 [12] Group 2: Investment Appeal of Banking Sector - The financial/banking industry is favored by Australian investors, particularly for dividend income, with major banks like CBA and National Australia Bank operating in an oligopoly [2][3] - Despite attempts by large international banks like HSBC to penetrate the Australian market, their success has been limited, reinforcing the strong position of the 'Big Four' banks [3] Group 3: Valuation Methodologies - The PE ratio is a common valuation tool that compares a company's share price to its earnings per share, but it should be used alongside other methods for a more accurate assessment [4][5] - The DDM is an established valuation technique that relies on consistent or modestly growing dividends, requiring a risk rate for discounting future payments [8][9]