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Investors may be wondering whether Commonwealth Bank of Australia at around A$174 per share still offers value, or if most of the opportunity is already priced in. The stock is up 1.0% over the past week, down 5.1% over the last 30 days, up 8.0% year to date and has returned 7.1% over the past year, which provides a mixed picture of recent sentiment and risk. These moves sit against a backdrop where investors are watching large Australian banks closely and paying attention to how capital allocation, cost control and regulatory settings might influence long term returns. For Commonwealth Bank of Australia, this context matters because even small shifts in expectations about profitability or required capital can have a clear effect on how the market is willing to price the stock. On Simply Wall St's valuation checks, Commonwealth Bank of Australia currently has a valuation score of 0 out of 6. The next sections will walk through the usual valuation tools investors consider, then finish with a broader way to think about what the current price might be indicating.

Commonwealth Bank of Australia scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Commonwealth Bank of Australia Excess Returns Analysis

The Excess Returns model asks a simple question: whether Commonwealth Bank of Australia is expected to earn more on its equity than the return investors require, and how long that surplus can last.

Here, the starting point is an estimated Book Value of A$46.19 per share and a Stable Book Value of A$48.87 per share, based on future book value estimates from 10 analysts. The model uses a Stable EPS of A$6.87 per share, drawn from weighted future return on equity estimates from 13 analysts, and an Average Return on Equity of 14.05%.

The required return for shareholders, or Cost of Equity, is A$3.87 per share, while the Excess Return is A$3.00 per share. In other words, the earnings implied by these assumptions sit above the level investors are assumed to require, and that surplus is capitalised into an intrinsic value of A$118.83 per share under this model.

Compared with the current share price around A$174, the Excess Returns valuation suggests the stock is about 46.4% above this intrinsic estimate, which points to a full and demanding price.

Result: OVERVALUED

Our Excess Returns analysis suggests Commonwealth Bank of Australia may be overvalued by 46.4%. Discover 9 high quality undervalued stocks or create your own screener to find better value opportunities.

Story Continues

CBA Discounted Cash Flow as at May 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Commonwealth Bank of Australia.

Approach 2: Commonwealth Bank of Australia Price vs Earnings

P/E is a useful yardstick for profitable companies because it links what you pay directly to the earnings each share is generating today. It gives you a quick sense of how much the market is prepared to pay for each dollar of profit.

What counts as a “normal” or “fair” P/E depends on what investors expect from a company’s future earnings and how risky those earnings appear. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk tends to support a lower P/E.

Commonwealth Bank of Australia currently trades on a P/E of 27.97x. That sits well above the wider Banks industry average of 11.01x and above a peer group average of 16.53x. Simply Wall St’s Fair Ratio for Commonwealth Bank of Australia is 20.36x, which is its proprietary estimate of what the P/E “should” be after accounting for factors such as earnings growth, profit margins, industry, market cap and company specific risks.

This Fair Ratio can be more informative than a simple comparison with peers or the industry because it adjusts for those company specific drivers. Set against the current P/E of 27.97x, the Fair Ratio of 20.36x points to the stock trading on a richer multiple than those fundamentals might imply.

Result: OVERVALUEDASX:CBA P/E Ratio as at May 2026

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Upgrade Your Decision Making: Choose your Commonwealth Bank of Australia Narrative

Earlier it was mentioned that there is an even better way to understand valuation, so Narratives are introduced here as a simple tool that lets you attach a clear story to your numbers by linking your view on Commonwealth Bank of Australia’s revenue, earnings and margins to a forecast and then to a fair value.

On Simply Wall St’s Community page, investors use Narratives to set assumptions and a fair value, then compare that to the current share price to help decide whether the stock looks attractively or richly priced for their own approach.

Because Narratives update when new information such as news, earnings or analyst revisions is added to the platform, your story and fair value stay aligned with the latest data instead of being a one off exercise.

For Commonwealth Bank of Australia, one investor might lean toward the more bullish A$142.00 Fair Value view that assumes revenue growing around 8.3% a year and earnings reaching about A$13.0b. Another might anchor on the more cautious A$100.00 Fair Value that uses slower 3.8% revenue growth and earnings of roughly A$10.6b. Narratives help you see exactly which set of assumptions is closest to your own thinking.

Do you think there's more to the story for Commonwealth Bank of Australia? Head over to our Community to see what others are saying!ASX:CBA 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include CBA.AX.

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