Is the Commonwealth Bank of Australia (ASX: CBA) share price a buy?
Today the CBA share price is down 0.6% with conflicting signals for investors. In Australia we have just learned that the national economy is growing at its slowest annual growth rate in a decade at just 1.4%, down from 1.8%, although it is still growing overall (even if the per-person numbers aren't inspiring).
The US is also showing signs of the start of an economic slowdown, with lower manufacturing and lower manufacturing jobs.
But here in Australia we have seen interest rates cut and the Australian house prices in Melbourne and Sydney start to move upwards again. In August, Sydney house prices rose 1.6% and Melbourne prices increased 1.4%.
So CBA is caught between positive local factors and negative global factors. A large part of Australia's economy is linked to the global economy, so we need things to go well overseas for continued economic prosperity here.
Executives at Commonwealth Bank probably had a sigh of relief when the CoreLogic August numbers came through, it was looking pretty negative for Australian property at the start of the year. We'll have to see how the important spring selling season goes, but it's unlikely we're going to see big negative months in September and October.
It seems to me that Commonwealth Bank could be the best positioned bank compared to Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB). CBA's loan book seemed to perform the best in the most recent statistics in terms of mortgage arrears being essentially flat, whereas other banks saw rises over the past quarter. I'll be very interested to see what effect the lower RBA interest rate and increased tax offsets have.
When you look at other 'dividend' shares like Transurban Group (ASX: TCL), Sydney Airport Holdings Pty Ltd (ASX: SYD) and Telstra Corporation Ltd (ASX: TLS), it seems like CBA may in-fact be a better value choice for income if Australia's economy is going to stabilise and improve from here.
Foolish takeaway
CBA is looking a better idea for value and dividends as each month goes by with better news for the Australian economy and property market. It's trading at 16x FY20's estimated earnings with a grossed-up dividend yield of 7.9%.
CBA looks like an interesting idea compared to other blue chips, but I think there are still plenty of better opportunities than Australia's economy.
