👉 Background: CommBank is the big yellow bank with the biggest of big customer bases - we're talking more than 15.9 million customers across Australia.

👉 What happened: CommBank has announced its whopping $9.8 billion annual cash profit for the last financial year. On top of that, the number of Aussies that use CommBank as their main financial institution jumped by nearly 1%. Throw on top of that, it saw its business banking division grow to more than 25% of businesses in Australia.

👉 What else: Interestingly, CBA’s profits actually fell in the second half of the year - but this didn’t seem to bother their rusted-on investors who now value CommBank at $227 billion. But many other investors are still unclear why CommBank is valued so differently to its rivals NAB, Westpac and ANZ.

What's the key learning?

💡Not all price to earning or P/E multiples are created equal.

💡Companies in the same industry can have wildly different valuations:

• Commbank is valued at 23 times its earnings
• ANZ are valued at 13 times earnings
  
• NAB is valued at 16 times earnings
• Westpac is also at 16 times earnings

💡Commonwealth Bank might have a higher P/E ratio because of its dominance in market share, its customer loyalty, or the fact that investors just rate their strategic execution. But, ultimately it comes down to the level of growth that investors believe will come from one company compared to its competitors.