Is ANZ (ASX:ANZ) Undervalued at $30? Exploring Valuation Through ASX 200 Lens

June 27, 2025 01:38 PM AEST | By Team Kalkine Media

Is ANZ (ASX:ANZ) Undervalued at $30? Exploring Valuation Through ASX 200 Lens — Image source: Shutterstock

PE Ratio-Based Sector Comparison

One of the simplest yet effective ways to approach ANZ’s valuation is through its price-to-earnings (PE) ratio. With ANZ’s current earnings per share (EPS) standing at $2.15 and its share price at approximately $29.51, the resulting PE ratio is 13.7x. In comparison, the average PE ratio across the banking sector is closer to 19x.

When this sector average is applied to ANZ’s EPS, the implied valuation jumps to $41.75, which suggests that ANZ shares may be trading at a significant discount relative to sector peers.

Dividend Discount Model: A Deeper Income Lens

For investors focused on income, the Dividend Discount Model (DDM) is a popular valuation tool. Using ANZ’s most recent dividend of $1.66 and applying a range of risk rates and dividend growth assumptions, a blended valuation emerges.

Even with conservative growth projections, the DDM produces a valuation of approximately $35.10. When using an adjusted dividend value of $1.69, this figure rises to around $35.74 — again above the current market price.

Beyond Numbers: What to Watch

While valuation models provide useful indicators, they should be part of a broader assessment. Key factors include ANZ’s approach to lending versus fee-based services, broader economic indicators like unemployment rates and housing trends, and the bank’s adaptability to macroeconomic shifts.

Being a constituent of the ASX 200, ANZ enjoys strong visibility among both institutional and retail investors. This makes its performance and valuation a closely watched topic in the financial community.

Multiple valuation methods indicate that ANZ shares may have upside potential based on earnings and dividend fundamentals. Investors should, however, pair these insights with a broader understanding of economic trends and company strategy before making decisions.

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