With earnings season behind us, it's worth asking if National Australia Bank Ltd. (ASX: NAB) shares are a buy.
NAB share price
As can be seen above, NAB shares (blue line) have outperformed their larger rival, Commonwealth Bank of Australia (ASX: CBA), over the past year, following the fallout of the Commbank money laundering allegations.
NAB reported its third quarter update on August 11, revealing:
- An unaudited cash profit of $1.7 billion, up 5%
- Expenses up 2%
- Impressive bad loans
NAB CEO, Andrew Thorburn, said the result reflected the bank's, "continued discipline and focus."
"Looking forward we expect to accelerate a range of productivity and growth initiatives, including greater use of digital solutions, 'customer journeys' and streamlined work practices."
Are NAB shares cheap?
NAB's third quarter report was promising, with low bad debts and healthy profit growth. Together with a robust capital position, there appears little reason to be overly concerned about the bank's ability to pay fully franked dividends in the short term.
Over the long-term, however, shares of NAB appear fully priced, in my opinion.
As I noted earlier this year, its shares would have to drop into the low $20's for me to get excited. Obviously, I may be waiting some time for the valuation to become more compelling.
Fortunately, patience doesn't lose us money.
