Is ANZ Fairly Valued? a PE Ratio Walkthrough for Investors

ANZ shares closed at A$35.50 on 22 May 2026. That price is visible to anyone with a brokerage app. What is less visible is whether A$35.50 represents fair value, a discount, or a premium for the earnings the bank actually produces. The price-to-earnings (PE) ratio, the most widely used valuation tool in equity analysis, offers a structured way to answer that question. Applied to ANZ’s FY24 earnings data and measured against its three major-bank peers (CBA, NAB, and Westpac), the ratio produces a sector-adjusted valuation that retail investors can calculate, interpret, and stress-test on their own. What follows is a step-by-step walkthrough: the formula, the live calculation, the peer comparison, and the limitations every investor should understand before treating the output as an investment signal.

What the PE ratio actually measures (and why it works for bank shares)

Before touching a formula, it helps to understand what the PE ratio is designed to reveal. At its simplest, the ratio answers one question: how much is the market charging today for each dollar of a company’s most recent annual earnings?

PE ratio, in plain English: The PE ratio is the price an investor pays per share divided by the earnings that share generated over the past year. A PE of 18x means the market is pricing each $1 of earnings at $18.

That makes it a relative value gauge. A PE of 18x is neither cheap nor expensive on its own; it only becomes meaningful when compared to the PE of similar companies operating under similar conditions.

The ratio works particularly well for mature, consistently profitable businesses. ASX major banks fit that description precisely: ANZ, NAB, WBC, and CBA produce reportable accounting profits year after year, making their PE ratios directly comparable across a stable peer group.

• Sectors where PE works well: Banking, insurance, consumer staples, utilities, and other mature industries with consistent earnings histories.
• Sectors where it breaks down: Pre-revenue biotechs, early-stage technology companies, and any business that has not yet recorded a profit.

Calculating ANZ’s PE ratio using FY24 earnings data

The calculation requires two inputs and one division. Nothing more.

The formula: PE = Share Price / Earnings Per Share (EPS)

1. Identify the earnings per share. ANZ’s FY24 reported EPS was A$2.15.
2. Identify the share price. The reference price used in this calculation is A$35.77 (the intraday high on 22 May 2026).
3. Divide. A$35.77 / A$2.15 = 16.6x.

That figure, 16.6x, means the market was pricing each dollar of ANZ’s FY24 earnings at $16.60 at that moment.

Why data provider PE figures may differ slightly from your own calculation

Financial data platforms such as Yahoo Finance and GuruFocus report ANZ’s trailing PE at 18.04-18.13x as of May 2026. The difference comes down to which earnings figure is used.

The 16.6x calculated above uses ANZ’s full-year FY24 EPS of A$2.15. Data platforms typically use trailing twelve-month (TTM) EPS, which rolls forward with each reporting period. ANZ’s TTM EPS as of May 2026 is A$1.97, a lower figure that produces a higher PE ratio.

Intraday price movements also shift the ratio in real time. A calculation done at the day’s low will produce a different PE from one done at the high. For any comparison to be meaningful, both the EPS figure and the reference price should be drawn from the same clearly stated point in time.

How the sector-adjusted valuation method works

Knowing ANZ’s PE ratio is step one. The more useful question is what the stock would be worth if the market valued it at the same multiple as its peer group.

The sector-adjusted valuation method answers this in two steps:

1. Find the sector average PE. The Australian banking sector average PE, as referenced in analyst commentary, sits at approximately 18x.
2. Multiply by the company’s EPS. A$2.15 x 18 = A$39.10.

That A$39.10 figure is not a price target. It is a benchmark: the price ANZ shares would trade at if the market assigned them the same earnings multiple as the broader sector average.

At A$35.77, ANZ trades at a discount of approximately A$3.33, or roughly 9%, to the sector-adjusted figure. That gap is what the PE method makes visible. Whether it represents a buying opportunity or a justified discount requires further analysis.

Where ANZ sits relative to the four major banks right now

The peer comparison sharpens the picture, and it surfaces one anomaly that changes how the sector average should be read.

As of May 2026, three of the four major banks cluster within a narrow band. ANZ trades at a trailing PE of approximately 18.0-18.1x. NAB and WBC sit at approximately 18-19x. The multiples are close enough to suggest the market views these three banks’ earnings quality and growth prospects as broadly comparable.

Then there is CBA.

CBA trades at a premium of approximately 50% or more to ANZ, NAB, and Westpac on a trailing PE basis. That gap is the single most defining feature of Australian major-bank valuations in May 2026.

CBA’s elevated multiple pulls the four-bank average PE into the low-to-mid 20s, well above the 18-19x range where the other three banks actually trade. Any sector-adjusted valuation calculated using the four-bank average will therefore overstate the implied fair value for ANZ, NAB, or WBC, because it incorporates a premium that the market assigns only to CBA.

Mid-2025 analyst commentary cited sector EPS growth forecasts of approximately 9-10% per annum. Despite similar growth outlooks across the four banks, the valuation gap has persisted, suggesting CBA’s premium reflects factors beyond near-term earnings, such as perceived earnings quality, franchise strength, or index-weight-driven demand.

What a low PE ratio does (and does not) tell you about ANZ shares

The PE calculation has produced a number. The sector comparison has placed that number in context. Neither step, on its own, tells an investor whether to buy, hold, or sell.

A stock may trade at a below-peer PE for entirely rational reasons. Slower expected earnings growth, higher perceived risk, weaker competitive positioning, or structural headwinds to margins can all compress a PE multiple without the stock being genuinely undervalued. The discount is the market’s current assessment, and that assessment may be correct.

The PE ratio also has structural limitations that apply regardless of the company being analysed:

• Backward-looking data. The ratio uses historical earnings. It does not account for whether next year’s earnings will grow, shrink, or disappear.
• No applicability to loss-making companies. A company with no profit has no meaningful PE ratio.
• No accounting for debt or balance sheet risk. Two companies with identical PEs may carry very different levels of leverage, a distinction the ratio ignores.
• Sensitivity to the peer group chosen. As the CBA anomaly demonstrates, the composition of the comparison set materially affects the output.

The qualitative layer retail investors should add to the PE analysis

A PE-derived valuation raises questions it cannot answer. For ANZ and Australian bank shares specifically, the following factors drive the earnings that sit beneath the ratio:

• RBA rate environment. The cash rate directly affects bank funding costs, mortgage rates, and net interest margins across the sector.
• Housing market conditions. Residential property price trends are a forward indicator for housing loan growth and credit quality across the major banks’ mortgage books.
• Credit quality and impairment trends. Unemployment stability and labour-market conditions feed directly into consumer credit risk and provisioning requirements.
• Competitive positioning among the four majors. ANZ’s growth strategy, including its mortgage book composition and institutional banking exposure, determines whether its earnings trajectory will converge with or diverge from peers.

According to Rask Media research, comprehensive qualitative analysis of a single bank share requires in excess of 100 hours before financial modelling begins. The PE ratio takes roughly 30 seconds to calculate. That gap illustrates where the real analytical work sits.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

The PE ratio is a lens, not a verdict: using it well in your ANZ analysis

The worked example above produced three reference points: ANZ’s FY24 PE of 16.6x, its trailing twelve-month PE of approximately 18x, and a sector-adjusted valuation of A$39.10. Together, these figures sketch a picture of relative value against the major-bank peer group. They are not a price target.

For context, a dividend discount model (DDM) approach applied to ANZ using the A$1.66 annual dividend has produced an averaged valuation of approximately A$35.10, according to available analysis. That figure closely matches the market price of A$35.50, suggesting the stock is priced near fair value from an income-based perspective as well.

The PE ratio is most useful not as a standalone signal but as a prompt for better questions:

• ANZ’s trailing PE of ~18x sits in line with NAB and Westpac but materially below CBA, confirming it is valued as part of the three-bank cluster rather than as a standout discount.
• The sector-adjusted valuation of A$39.10 implies approximately 9% upside from current levels, but that figure is inflated by CBA’s outsized influence on the four-bank average.
• The ratio identifies a valuation gap. It does not explain whether the gap will close, widen, or persist, and answering that question requires qualitative analysis the PE method cannot provide.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors.