Pete Wargent blogspot

CEO AllenWargent Property Buyers, & WargentAdvisory (institutional). 6 x finance author.

'Huge fan of your work. Very impressive!' - Scott Pape, The Barefoot Investor, Australia's #1 bestseller.

'Must-read, must-follow, one of the finest analysts in Australia' - Stephen Koukoulas, ex-Senior Economics Adviser to Prime Minister Gillard.

'One of Australia's brightest financial minds, must-follow for accurate & in-depth analysis' - David Scutt, Business Insider.

'I've been investing 40 years yet still learn new concepts from Pete; one of the finest young commentators' - Michael Yardney, Amazon #1 bestseller.

'The most knowledgeable person on Aussie real estate - loads of good data & charts...most comprehensive analyst I follow in Oz' - Jonathan Tepper, Variant Perception, 2 x NYT bestseller.

Sunday, 8 June 2014

Bank

Australia's major banks have been wealth creation engines over the past decade...except for one.

National Australia Bank (NAB) has failed to create anything like the results of the other 'Big 4'.

Profitability has been sliding, and the ROE has remained inferior to the other major banks.

While the share prices of all the other banks have soared by 80-100% over past decade, NAB has continued to tread water.

At least part of the reason has been NAB's UK exposure which has held back its profitability.

As a result, NAB may appear to be cheap.

With a price to book ratio of well under 2, a price/earnings ratio of under 13, and when you compare it to the miserable returns from a bank account or term deposit, a fully FRANKED dividend yield of 5.8%, it all might look remarkably tempting (click chart):




Remember the old adage, though: "it is better to own a wonderful company at a fair price than a fair company at a wonderful price"...