Brazilian stock report - Banco Bradesco preference

BRAZ

Banco Bradesco Preference Shares falls for a fourth consecutive day, a four-day fall of 1.7% October 17, 2017 18:00 BRST

NEWS BITES - BRIC

Banco Bradesco SA (SA:BBDC4), Brazil's 4th largest Bank by market cap, has fallen 9.0 centavos (0.2%) for a fourth consecutive day on Tuesday. This brought its four-day fall to 63.0 centavos (1.7%), compared with the Brazil Index 50 which fell 114.5 points (0.9%) in the four days for a relative price change of -0.8%. Cumulative volume in the 4 days was 0.9 times the average 4-day volume of 9.4 million preference shares. The preference stock last traded at R$36.43.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

Momentum, Moving Annual Return, Beta & Alpha, Turnover Rate & Turnover Period

SECTION 4 RANKING

SECTION 5 FINANCIALS

Financials Summary, Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-, Trailing 12 Months Dividends

SECTION 6 PROFILE

Activities, Industry & Sector, Issued Capital

SECTION 7 STOCK BUZZ

SECTION 1 BANCO BRADESCO PREFERENCE SHARES BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the preference stock, defined by its yield of 1.8%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.3% is 80.5%. This suggests the preference stock is overvalued in dividend yield terms.

1.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 13.6 [8.5]. We estimate Banco Bradesco Preference Shares preference stock is trading at a current year P/E of 7.3 and a forward year P/E of 7.3.

+ Dividend yield of 1.8% [2.8%].

1.3 Technicals:

+ The price decreased 1.7% in the last week.

+ Compared with the Brazil Index 50 which fell 0.9% for the week, this represented a relative price decrease for Banco Bradesco Preference Shares preference stock of 0.8% for the week.

+ Falls to Rises: in the past month the number of falls outnumbered rises 13:8 or 1.6:1.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
Total Debt to Equity4.9In Bottom 8%
Return on Assets [ROA] %1.3In Bottom Quartile
% Prem to Vol Wtd Price0.7In Bottom Quartile

SECTION 2 BANCO BRADESCO PREFERENCE SHARES BULLISH SIGNALS

2.1 Fundamentals:

+ The P/E of 13.6 multiplied by the P/NTA of 1.3 is 18.0. Being less than the Benjamin Graham benchmark of 22.5 the preference stock appears undervalued.

+ The company is cash rich with Cash to Market Capitalisation at 65.9%.

+ Net profit margin has averaged 13.6% in the last 3 years. This is better than the sector average of 10% and suggests a high margin of safety.

+ As per the Du Pont analysis, Return on Equity of 15.0% is better than sector average of 12.1%. This is computed as net profit margin of 12.7% times asset turnover [sales/assets] of 0.17 times leverage factor [total assets/shareholders' equity] of 11.7.

2.2 Undervaluation [compared with sector average]:

+ Return on Equity 15.0% [12.1%].

+ Return on Assets 1.3% [1.1%].

2.3 Technicals:

+ The 2.5% discount to 12-month high of R$37.37 against the 53.3% premium to 12-month low of R$23.77 suggests the preference stock continues to push for new highs.

+ In the last three months the preference stock has hit a new 52-week high eighteen times, pointing to a significant uptrend.

+ The present value of R$1,000 (PV1000) invested one year ago in Banco Bradesco Preference Shares is R$1,331, comprising a capital gain of R$299 and dividend reinvested of R$32.

PV10001-week1-month1-year
BBDC4.SA9831,0071,331
Brazil Index 509911,0261,214

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco Bradesco Preference Shares is R$2,033, including a capital gain of R$618 and dividend reinvested of R$415.

+ 10 years Multiplier in BRL = 2.033x

+ Compound Annual Growth Rate (CAGR) in BRL = 7.3%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in Banco Bradesco Preference Shares is $US1,149, including a capital loss of $US86 and dividend reinvested of $US234.

+ 10 years ago BRL 1 equalled USD 0.5554

+ 10 years Multiplier in USD = 1.149x

+ Compound Annual Growth Rate (CAGR) in USD = 1.4%

Oct 17, 2017: USD 1 equals BRL 3.19

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverR$238.3 million (US$74.8 million)In Top 2%
EBITDA Margin %75.7In Top Quartile
Volatility %1.4In Top Quartile
Price/MAP2001.21In Top Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Momentum:

+ Volume: there were 6,540,000 preference shares worth R$238.3 million (US$74.8 million) traded today. In the past week, volume was 0.9 times average and the preference shares were down 1.7%. The volume was 0.7 times the average daily trading volume of 9.4 million preference shares.

3.2 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 4 of the last 5 years. An investment a year ago in BBDC4 would have produced a return of 32.3%.

BBDC4Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 1736.430.6629.92.432.3
1 Yr ago28.041.6470.91080.9
2 Yrs ago16.410.89(24.1)4.1(20.0)
3 Yrs ago21.630.714.93.718.7
4 Yrs ago18.820.7115.54.319.8

Close 5 years ago R$16.29

3.3 Beta & Alpha:

+ Beta: the Beta of Banco Bradesco Preference Shares preference stock is 1.4. A Beta greater than 1 suggests this is a high risk, high return preference stock with volatility greater than that of the market.

+ Alpha: the Alpha of the preference stock is 2.0. The actual return of 33.37% exceeded the expected return of 31.4%, reflecting outperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 62.6% (or a turnover period of 1 year 7 months). This average length of ownership of the preference stock at 1.0 times the average holding period of 1 year 7 months for preference stocks in the Brazil Index 50 suggests a larger number of speculators on the share register, making it less safe for long-term investors.

SECTION 4 RANKING

Global Rank [out of 47,797 stocks] and Rank in the American Region [out of 12,758 stocks]

DescriptionValueGlobal RankIn Am Region
MCap (US$)34.9B412198
Total Assets (US$)372B19999
Revenue (US$)63.7B14446
Net Profit (US$)4.8B194107
Return on Equity %15.07,3321,477
Net Profit Margin %12.79,1712,214
Price to Book1.314,2132,479
Price/Earnings13.67,8361,301
Yield %1.812,4652,969
PV$1000 (1Year) US$*1,34011,3002,898
US$* Change (1Year) %33.511,3342,865

* 1 year ago USD 1 = BRL 3.21

Oct 17, 2017: USD 1 equals BRL 3.19

SECTION 5 BANCO BRADESCO PREFERENCE SHARES FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)63.948.332.9
Pretax (USD B)8.636.1
Net (USD B)4.85.74.8
EPS (BRL)2.67663.11822.3967

Net profit was down 16.8% from US$5.7 billion in 2015 to US$4.8 billion in 2016. Earnings Per Share (EPS) was down 14.2% from R$3.12 to R$2.68.

5.2 Annual Report for the year ended December 31, 2016 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Total income up 32.3% from BRL152.7b ($US38.3b) to BRL202.0b ($US62.1b).

+ Total income to total assets up from 0.1 to 0.2.

+ Deposits up 19.5% to BRL235.5b ($US72.4b).

+ Net Loans up 2.2% to BRL312.7b ($US96.1b).

Unfavourable Changes:

+ Net profit down 16.8% from BRL18.1b ($US4.6b) to BRL15.1b ($US4.6b)

+ EPS down 14.3% from BRL3.43 (US86.12c) to BRL2.94 (US90.5c).

+ Return on Equity down from 18.9% to 15%.

+ Tier 1 Ratio down from 12.7% to 12%.

+ Tier 2 Ratio down from 4.1% to 3.4%.

+ Non-Performing loans to Net loans improved from 7.94% to 5.63%.

Note:

+ Net tangible assets per share steady at BRL15.2 ($US4.7).

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (centavos)
17 Oct 201766.38
17 Oct 2016163.92
17 Oct 201589.37
17 Oct 201470.49
17 Oct 201370.6

SECTION 6 BANCO BRADESCO PREFERENCE SHARES PROFILE

6.1 Activities

Banco Bradesco S.A. attracts deposits and offers commercial banking services. The Bank offers business loans, personal credit, mortgages, lease financing, mutual funds, securities brokerage, and Internet banking services. Bradesco operates in Brazil and Argentina, the United States, the Cayman Islands, and the United Kingdom. Bradesco offers credit cards, insurance, and pension funds.

6.2 Industry & Sector

Classification LevelName of Sector
Economic SectorFinancials
Business SectorBanking & Investment Services
Industry GroupBanking Services
IndustryBanks

6.3 Issued Capital

Based on 3,054,480,793 issued shares the market capitalisation is R$111.3 billion (US$34.9 billion).

SECTION 7 STOCK BUZZ

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October 09: Banco Bradesco Preference Shares announces dividend

Banco Bradesco Preference Shares today announced a cash dividend of 1.90 centavos per share. The ex dividend date is Tuesday, October 03, 2017 and the record date is Monday, October 02, 2017 and it is payable on Wednesday, November 01.

September 04: Banco Bradesco Preference Shares announces dividend

Banco Bradesco Preference Shares today announced a cash dividend of 1.90 centavos per share. The ex dividend date is Monday, September 04, 2017 and the record date is Friday, September 01, 2017 and it is payable on Monday, October 02.

August 07: Banco Bradesco Preference Shares announces dividend

Banco Bradesco Preference Shares today announced a cash dividend of 1.90 centavos per share. The ex dividend date is Wednesday, August 02, 2017 and the record date is Tuesday, August 01, 2017 and it is payable on Friday, September 01.

February 07: Banco Bradesco Preference Shares announces EGM

Banco Bradesco Preference Shares has announced its Extra Ordinary General Meeting will take place on Thursday, April 27.

February 07: Banco Bradesco Preference Shares announces AGM

Banco Bradesco Preference Shares has announced its Annual General Meeting will take place on Friday, March 10.

Contact: (11)3684 3749

Physical Address: Cidade de Deus s/n Vila Yara Osasco, SP 06029-900 Brazil

State/Province/Country: Brazil

Country of Incorporation: Brazil

Exchange: BM&F BOVESPA

ISIN: BRBBDCACNPR8

SA:BBDC4; SAO:BBDC4; BZ:BBDC4; BBDC4.SA

PermID: 5035095906

Banco Bradesco S.A.

Source: www.BuySellSignals.com