Own NAB shares? You've just had a great month.

NAB shares smashed the market over July…

| More on:
Happy young couple saving money in piggy bank.

Image source: Getty Images

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

The S&P/ASX 200 Index (ASX: XJO) has just capped off one of its best months of the year over July. The month just gone saw the ASX 200 rise by a solid 4.2%, which is certainly an above-average metric for ASX 200 shares. But let's talk about what happened with National Australia Bank Ltd (ASX: NAB) shares.

Although the ASX 200 had a top time over July, NAB shares fared even better. The ASX 200 bank stock started the month priced at $36.23 a share. But by the time trading wrapped up for July, NAB had finished up at $38.58. That's a gain worth a healthy 6.49%.

Created with Highcharts 11.4.3National Australia Bank PriceZoom1M3M6MYTD1Y5Y10YALL1 Jan 20241 Aug 2024Zoom ▾Jan '24Feb '24Mar '24Apr '24May '24Jun '24Jul '24Aug '24Jan '24Jan '24Mar '24Mar '24May '24May '24Jul '24Jul '24www.fool.com.au

Not bad for just one month, especially considering NAB's current annual dividend yield is sitting at 4.42%.

There wasn't any significant news out of NAB in July that might easily explain this positive outlook. At the start of the month, we discussed how some NAB executives had recently picked up additional tranches of shares, which may have helped boost investor sentiment over July.

NAB also continued to buy back its own shares with gusto over July, which would have done nothing to hurt the bank's stock price.

However, NAB's gains over July weren't an outlier amongst its peers. Last month was fantastic for almost every ASX bank stock.

For example, the Westpac Banking Corp (ASX: WBC) share price rose by 9.5% in July and finished the month at a multi-year high. Commonwealth Bank of Australia (ASX: CBA) shares shot up 7.94% and hit several new record highs of their own.

What's next for NAB shares?

After such a strong month for NAB, many investors might be in a celebratory mood and wondering what might be next for the ASX 200 bank.

Unfortunately for those investors, most ASX brokers seem to be beginning to unify in their views that the ASX bank shares, including NAB, are starting to look expensive.

Last month, my Fool colleague James took stock of the views of ASX broker Bell Potter on the bank shares.

Here's some of what that broker had to say:

In our view, the banks are too expensive at current levels. Our recommendation is an underweight to the banks as we expect the sector is due a correction without a significant change to the earnings outlook…

In our view, bank sector valuations are expensive. Most valuation metrics point to elevated prices..

The elevated P/B ratio indicates that current market prices may exceed the underlying value of these banks. Above-average multiples could be justified if earnings growth is expected to be above average, but consensus has earnings going backwards in FY25 and low single growth in FY26.

"Due for a correction" is probably the last thing bank investors want to hear right now. However, we'll have to wait and see what happens. After all, brokers have been telling investors to sell CBA shares for years now, yet that bank has gone on to hit new record high after new record high.

Let's see how the NAB share price fares over August.

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Bank Shares

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Dividend Investing

Are CBA shares still a good buy today for passive income?

Looking to earn passive income from ASX dividend stocks? Here’s my take on CBA shares.

Read more »

Shocked office worker staring at computer screen with colleagues working in the background.
Bank Shares

The ASX bank share beating CBA in 2025

Many investors might not realise this smaller bank stock is leading the pack this year. 

Read more »

man thinking about whether to invest in bitcoin
Bank Shares

Here's what needs to happen for the CBA share price to try and reach $200

What could drive the CBA share price higher?

Read more »

A young woman sits at her desk in deep contemplation with her hand to her chin while seriously considering information she is reading on her laptop.
Bank Shares

Why now could be an opportune time to sell CBA shares

A leading expert offers his verdict on the outlook for CBA shares.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Bank Shares

The Westpac share price is a buy – UBS

The broker is optimistic on Westpac shares.

Read more »

Bank building with the word bank on it.
Bank Shares

The biggest buyers and sellers of ASX 200 bank stocks revealed

Macquarie breaks down who’s been buying and who’s been selling the ASX 200 bank stocks.

Read more »

A young woman sits with her hand to her chin staring off to the side thinking about her investments.
Resources Shares

Should I switch my ASX 200 banking stocks for ASX 200 miners before earnings season?

The ASX 200 Index is dominated by Australia's bank and materials/mining sectors, which together account for around half of the…

Read more »

A man sits in contemplation on his sofa looking at his phone as though he has just heard some serious or interesting news.
Bank Shares

Here's when Westpac says the RBA will now cut interest rates

The RBA surprised everyone by keeping rates on hold last week. So, when will the next cut happen?

Read more »