Commerzbank AG
Research
Buy by micke (04/10/2023)
- 14.00 +39.31% on 25/04/2024
Commerzbank has for some years successfully executed a restructuring program, and is now a profitable bank with my long term estimated EPS €2/year. Based on current price €10.4 (2023-09-29) PE24=5. I think a reasonable long term valuation is PE25=10, which at EPS of 2 would mean a share price of €20. Commerzbank owns a significant part of Polish mBank, approximately 70%, which grows with high profit but mBank has given Polish house owners Swiss franc loans which is a risk.
2023-09-29 Commerzbank announced that they will increase returns to shareholders for 2024 to 70% of earnings and well above 50% the years after. With an estimated EPS of €2 this would be €1.4/share. The share price increased very significantly on this news +10% to €10.61 at AM10:00.1Monitor by Alpha (26/03/2023)
Commerzbank's restructuring pressures current profits. The market expects profits to recover 2023/2024. The historical profit margin is at best 10% in the last 10 years (compared to 25-45% for Swedish banks). With a market cap of €8B the shares are close to 10x EV/E in 2024 (€0.70 per share). This is a fair value for the sector with the turn-around and market risks for Commerz bank. Sentiment and momentum could keep the share price moving.
0