This bank is still receiving a vote of confidence after a strong run.
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Tristan Harrison Tristan Harrison is one of the longest-serving writers at The Motley Fool Australia. Tristan has been contributing ASX news and stock analysis articles since 2016. His aim is to help Australians learn about great ASX shares, with a focus on ASX dividend shares and undervalued ASX growth shares. He holds an advanced diploma from the Association of Accounting Technicians and is enrolled in the Chartered Institute Management Accountant (CIMA) qualification program. Published November 26, 11:14 am AEDT
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The National Australia Bank Ltd (ASX: NAB) share price recently reached a 12-year high of $40.25 on Monday. It’s getting close to its pre-GFC high of $41.63 after rising 40% in the past year.
Despite the ASX bank share’s lofty valuation and high price-earnings (P/E) ratio, NAB is still attracting investment dollars.
It’s one thing to see a particular respected institution back a business with an investment, but it could be an even greater vote of confidence for leadership figures to buy.
The market can worry when leadership figures decide to sell shares, but it can be seen as a good sign if they buy. It suggests they seem to like the business’ future prospects and are willing to put their own money into backing the company.
Let’s have a look at which NAB directors have invested recently.
Christine Fellowes
The latest investment made was by Christine Fellowes, which was enacted on 22 November 2024.
Fellowes decided to buy a total of 2,405 NAB shares through an on-market trade for a total value of $95,887.35, which works out to be an average share price of $39.87, which is close to the current valuation.
This brings the director’s total holding to 7,300 NAB shares worth approximately $290,000.
Alison Kitchen
The next latest on-market investment by one of the ASX bank share’s directors was by Alison Kitchen.
On 14 November 2024, Kitchen decided to buy 1,297 NAB shares through an on-market trade. The total cost of those shares was $49,934.50, which translates into an average price per share of $38.50. Thus, she managed to nab this investment at a cheaper price than Fellowes.
After this transaction, Kitchen now has 7,417 NAB shares, which have a total value of around $293,000.
Is the outlook for NAB shares promising?
When NAB released its FY24 result, the bank gave some comments about the economic outlook. It said:
In Australia, growth has been weak, in part due to the adjustment by households to higher interest rates and cost of living pressures. While the first half of 2024 will likely mark the trough in real GDP growth, the pick-up in growth from there is expected to be gradual with 1% forecast this year and around 2.25% over 2025 and 2026.
Easing inflation, tax cuts and energy subsidies will all help put households in a better position through the second half of 2024 but early indications of how this affects consumption and economic growth are mixed, with some of the benefit likely to be saved initially. Weak growth will also feed into labour demand with the unemployment rate forecast to rise a little further before stabilising around 4.5%.
Credit growth is expected to slow to about 4.5% over 2025 and 2026. While moderating inflationary pressures are encouraging, this is happening gradually meaning cash rate cuts are unlikely before February 2025. The pace at which inflation slows and the extent of labour market adjustments remain key to the outlook including the path of monetary policy.
According to the forecast on Commsec, the bank is projected to make earnings per share (EPS) of $2.39 in FY25 and $2.44 in FY26. That puts the NAB share price at more than 16x FY25’s and FY26’s estimated earnings.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.
