The Commonwealth Bank of Australia (ASX: CBA) share price has been hit in the market correction we've seen over the last six trading days on the ASX.
CBA shares were down 9.4% in this time, although they're slowly recovering some of that lost ground as the S&P/ASX 200 Index (INDEXASX: XJO) pushes higher this morning.
With its dividend yield now more appealing, and a reasonably solid set of financial results delivered earlier this month, is the Commonwealth Bank share price now in the buy zone?
Reasonably solid recent financials
Back on 12 February, Commonwealth Bank revealed its financial results for the six months to December 2019. CBA's operating income came in at $12,416 million and although this was flat on the prior corresponding period (pcp), it was a 3.5% increase on the second half of FY19.
Operating expenses, however, increased 2.6% during the half to $5,429 million, driven by wage inflation and higher IT, risk, and compliance costs.
The bank's net profit after tax came in at $6,161 million, which was up 34% on the pcp. This result included a $1,688 million gain on the sale of the Colonial First State Global Asset Management business.
With these results, Commonwealth Bank declared a fully franked interim dividend of $2.00 per share. Although this was flat on the pcp, it was in line with the market's expectations.
I believe that Commonwealth Bank delivered quite a sound set of financial results in a very challenging operating environment of low interest rates and relatively low credit growth.
CBA also displayed relatively strong volume growth in home lending and deposits compared to the other major large banks Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd. (ASX: NAB), and Australia and New Zealand Banking Group (ASX: ANZ).
Well-positioned in a challenging market
I believe that Commonwealth Bank is well-positioned to deliver stronger revenue growth over the next couple of years, driven by a recovering housing market.
Despite the downside of the current challenging economic conditions, I think that over the short-term, CBA is as well-positioned as any of the big four banks to leverage the upswing in the residential Australian property market. This upswing began last year in most major Australian cities.
However, uncertainties remain regarding the global economic outlook, especially over the next few months, exacerbated by the impact of the coronavirus. This could see to more market volatility over the short term.
Over the long term, however, I think CBA is positioned to grow at a solid rate. This is underpinned by the strong fundamentals of the Australian economy, Australia's solid pipeline of infrastructure investment over the next decade, and the rising demand for new residential property driven by Australia's growing population.
Additionally, in my opinion, Commonwealth Bank is still the market leader amongst the big four banks with regards to technological innovation, and it will continue to invest cleverly for future growth over the next decade.
Foolish takeaway
With a recent correction to the Commonwealth Bank share price, CBA shares are now trading with a more attractive price-to-earnings (P/E) ratio of around 16. They're also offering an attractive trailing dividend yield of 5.3%, fully-franked.
Combined with solid recent financials, I believe that this puts the Commonwealth Bank share price in the buy zone, despite the challenging market conditions facing banks over the short to medium term.
In saying that, it's important to keep in mind market volatility over the next few months is very likely. Therefore, I would only buy shares with a long-term outlook in mind.
