Despite rallying 2% higher on Friday, the Westpac Banking Corp (ASX: WBC) share price is still down over 11% since the turn of the year.
Like all of Australia's leading banks, Westpac's shares have come under significant selling pressure this year largely because of the negative impact of the Royal Commission and concerns over the slowdown in the housing market.
While these are certainly reasons to be concerned, I think the selloff has been a bit of an overreaction.
Is it time to buy Westpac shares?
This decline has left its shares trading at a little over 11x estimated full-year earnings and 1.5x book value. It also means that they offer investors a trailing fully franked 6.7% dividend now.
So with its shares trading at a discount to its historical averages and providing a very generous dividend yield, I think Australia's oldest bank is great value and a top option for investors that don't already have meaningful exposure to the banks.
It appears I'm not the only one that thinks this way, either.
According to a change of director's interest notice filed today, director Peter Nash has dipped into the market this week to top up his shareholding.
The release reveals that Mr Nash bought 2,876 shares through an on-market trade on Thursday at an average price of $27.52 per share. This $79,000 investment increases his holding by 56% to a total of 8,020 ordinary shares. He also holds 1,032 capital notes.
I think this insider buying is a big confidence boost. As I mentioned earlier, I see insider buying as a bullish indicator because very few people should know a company, its prospects, and intrinsic value better than its own directors.
As a result, this cements my belief that Westpac is the best option in the sector ahead of National Australia Bank Ltd (ASX: NAB) and Commonwealth Bank of Australia (ASX: CBA).
