Australia's biggest company and the world's most expensive bank stock has broken its price record three times in a month.
Commonwealth Bank shares spiked almost two per cent to $172.92 on Friday morning, thanks to broader cyclical flows into the Australian share market and narrowing bets on an interest rate cut next week.
However, as the price snapped back by the afternoon, analysts say the stock is overvalued and its profit growth can't justify its lofty valuation.
"It's eye-wateringly overvalued still," Capital.com senior market analyst Kyle Rodda told AAP.
"It's priced like a high-value, growth tech stock in the United States, when it's a bank that doesn't really have strong growth."
CBA's price-to-earnings ratio, a key-measure of a stock's value, is around 28.7, while NAB, Westpac and ANZ - still considered expensive - range from the low-to-mid teens.
Its earnings ratio is on par with Facebook owner Meta, at 25.7, but lower than than the world's two largest companies Apple, at roughly 33, or chipmaker Nvidia's 45.3 and is currently more than double investment giant JP Morgan's 13.
"(CBA) prints money, it makes stacks of it but it doesn't grow it at the kind of rate that would justify it to be valued the same as a Google or something like that," Mr Rodda said.
Earlier in the week, the bank posted a $2.6 billion profit for the March quarter, up six per cent on the same quarter last year.
Chief executive Matt Comyn noted heightened global uncertainty and macroeconomic risks, but struck a defensive tone despite the solid result.
"Our deliberate and long-term conservative approach to key balance sheet settings enables us to support our customers, the economy and our shareholders through a range of macroeconomic scenarios," Mr Comyn said on Wednesday.
The bank's balance sheet is indeed strong, with capital ratio of 11.9 per cent, well above the prudential regulator's 'unquestionably strong' 10.5 per cent buffer requirement.
However, bank margins have been sliding for 20 years, and all big four players are all "ex-growth" - established companies that have passed their high-growth phases.
However, while NAB, ANZ and Westpac have traded in wide but defined ranges since around 2007, CBA shares have continued to soar.
Cyclical inflows from global markets and huge superannuation funds with set blue chip allocations continue to push capital, almost by default, into Australia's biggest company.
"At some point in time, you would imagine there will be some kind of correction which will bring it much closer to fair value," Mr Rodda said.
"There's two ways this could happen: either the price isn't going to go much higher for a really, really long time until earnings catch up to justify the price, or the price comes down to more accurately reflect the earnings."
CBA shares were back below the $170 level by 2pm AEST, having given up most of the early morning spike.
