If you are wondering whether National Australia Bank (NAB) shares are offering fair value at current levels, you are not alone. This article is here to help you make sense of the numbers. NAB shares last closed at A$41.02, with a 3.3% decline over the past week and a 2.6% decline over the past month, set against a 12.9% return over 1 year, 52.2% over 3 years and 116.8% over 5 years. Recent share price moves have come alongside ongoing market attention on the Australian banking sector and how lenders are positioned as conditions evolve. For NAB, investors have been weighing up how its franchise strength and balance sheet translate into resilience and future prospects. On our checks, NAB scores 1 out of 6 on valuation. This means it appears undervalued on only one of the six metrics we assess, giving it a value score of 1/6. Next, we will compare different valuation approaches before finishing with a more complete way to think about what the stock is really worth.

National Australia Bank scores just 1/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: National Australia Bank Excess Returns Analysis

The Excess Returns model looks at how much profit a company can earn above the return that shareholders require, based on the equity invested in the business. For National Australia Bank, this approach starts with a Book Value of A$20.59 per share and a Stable Book Value estimate of A$22.21 per share, drawn from analyst forecasts.

On the earnings side, the model uses a Stable EPS of A$2.51 per share, based on weighted future Return on Equity estimates from 13 analysts, and an Average Return on Equity of 11.29%. The Cost of Equity is A$1.72 per share, which implies an Excess Return of A$0.78 per share. This is the amount the model suggests NAB could earn above the required return on its equity base.

Bringing these inputs together, the Excess Returns valuation produces an intrinsic value of about A$39.78 per share. Compared with the recent share price of A$41.02, this implies the stock is around 3.1% overvalued. The model is signalling that NAB is trading very close to its estimated value.

Result: ABOUT RIGHT

National Australia Bank is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.NAB Discounted Cash Flow as at Jan 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for National Australia Bank.

Approach 2: National Australia Bank Price vs Earnings

For a profitable bank like National Australia Bank, the P/E ratio is a useful way to think about what you are paying for each dollar of earnings. Higher growth expectations or lower perceived risk can justify a higher P/E, while slower growth or higher risk usually point to a lower, more conservative multiple.

Story Continues

NAB currently trades on a P/E of 18.49x. That sits close to the peer average of 18.08x and above the broader Banks industry average of 11.06x, which indicates that investors are pricing NAB more in line with similar institutions rather than the wider sector.

Simply Wall St’s Fair Ratio for NAB is 21.06x. This is a proprietary estimate of what the P/E might be, given factors such as earnings growth, the bank’s industry, profit margins, market cap and company specific risks. Because it pulls these inputs together, the Fair Ratio can be more tailored than a simple comparison with peers or industry averages, which only look at headline multiples.

Comparing the Fair Ratio of 21.06x with the current P/E of 18.49x shows that NAB is trading below that tailored estimate.

Result: UNDERVALUED based on this P/E comparisonASX:NAB P/E Ratio as at Jan 2026

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1446 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your National Australia Bank Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories investors create on Simply Wall St’s Community page that link their view of National Australia Bank’s future revenue, earnings and margins to a forecast and then to a Fair Value they can compare with the current price to help decide when to buy or sell. Each Narrative updates automatically as new news or earnings arrive. One investor might build a more optimistic NAB Narrative that leans toward the higher analyst expectations of A$8.1b in future earnings and a richer future P/E of about 18.63x, while another might lean toward the lower A$6.4b earnings view and a more cautious valuation. This gives you two very different but clearly explained paths from story, to forecast, to Fair Value.

Do you think there's more to the story for National Australia Bank? Head over to our Community to see what others are saying!ASX:NAB 1-Year Stock Price Chart

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NAB.AX.

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