Is the CSL share price overvalued?

Is the CSL Ltd (ASX: CSL) share price getting carried away on the ASX?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

You'd have to be living under a rock not to have heard about the raging success of CSL Limited (ASX: CSL). By far the most successful blue-chip on the ASX in recent years, CSL has been consistently printing new all-time highs over the course of this year – most recently this Monday ($287.31).

Even in the market volatility that has infected the stock market this week, CSL shares are today sitting at $277.62 (at the time of writing) – hardly even a 'dip' in the scheme of things.

But CSL's rampant share price growth has started to raise some eyebrows at a valuation level. The company now trades on a earnings multiple of over 44, which is quite a premium to be asking of investors.

Sure, CSL is still a healthy company and a growth engine – but this price is assuming growth will sharply accelerate from here, which I think is optimistic to say the least.

According to reporting in the Australian Financial Review (AFR), I'm not the only one who thinks CSL's share price might have gotten a little carried away.

SG Hiscock fundie Hamish Tadgell is quoted as stating:

CSL is a prime example of a quality company which has seen its share price pushed to extreme levels by return-hungry investors…CSL is a fabulous business. I've been following it for 20 years and I don't think that it's been in better shape than at the moment. But it's a long-duration business that's trading on 45 times [earnings]. That valuation is looking pretty stretched.

Mr Tadgell also warns that if the market comes off the boil, we could see CSL trading at an earnings multiple closer to 30, which implies a share price around $187. That implies a possible downside of around 30% from today's prices.

Of course, we did see something like that happen in the Christmas correction last year. CSL shares slumped to $173.33 in December 2018 after the broader market was violently sold-off.

Foolish takeaway

Although the CSL share price is undoubtedly expensive, you are also paying for a top-notch company on which a premium price is arguably justified. How much of a premium you're willing to pay is a personal choice, but I personally will wait for a better opportunity than today presents.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the 'five best ASX stocks' for investors to buy right now. We believe these stocks are trading at attractive prices and Scott thinks they could be great buys right now...

See The 5 Stocks *Returns as of 30 April 2025

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Gainers

A woman's hand draws a stylised 'Top Ten' on a projected surface.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX shares returned to positive territory this Tuesday.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Share Gainers

Why Breville, Clarity, EOS, and TechnologyOne shares are racing higher today

These shares are having a strong session on Tuesday. But why?

Read more »

Person pretends to types on laptop drawn in sand.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough start to the week today.

Read more »

A person in a gorilla suit leaps really high holding a banana, nearly doing the splits.
Share Gainers

Up 1,238% in a year, why is this ASX gold stock surging again on Monday?

The ASX gold stock is now well into ten-bagger range and still rising fast today.

Read more »

A happy investor sits at his desk in front of his laptop and does the mexican wave with his arms to celebrate the returns from his ASX dividend shares
Share Gainers

Why EOS, Gorilla Gold, Lendlease, and OFX shares are charging higher today

These shares are starting the week on a positive note. But why?

Read more »

A woman in a business suit sits at her desk with gold bars in each hand while she kisses one bar with her eyes closed. Her desk has another three gold bars stacked in front of her. symbolising the rising Northern Star share price
Gold

How this ASX All Ords gold stock turned $10,000 into $78,740 in just one year

The ASX All Ords gold miner has raced higher over the year. Let’s find out how.

Read more »

Ten happy friends leaping in the air outdoors.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors enjoyed a happy end to the trading week this Friday.

Read more »

A woman wearing yellow smiles and drinks coffee while on laptop.
Bank Shares

CBA shares top $170. Where to now?

Another day, another record high for CBA shares.

Read more »