Brazilian stock report - Banco Bradesco preference
Banco Bradesco Preference Shares drops 3.0% on firm volume August 17, 2018 18:00 BRT
NEWS BITES - BRIC
Banco Bradesco SA (SA:BBDC4), Brazil's 4th largest Bank by market cap, has dropped 90.0 centavos (3.0%) from its last trading session of August 16 to close at R$28.62. Compared with the Brazil Index 50 which fell 123.2 points (1%) in the day, the relative price change was -2.1%. The fall was exacerbated by firm volume of 1.1 times the average daily volume of 11.6 million preference shares. Its MCap is R$96.2 billion (US$24.6 billion).
Highlights in today's Report:
SECTION 1 BEARISH SIGNALS
SECTION 2 BULLISH SIGNALS
SECTION 3 PRICE VOLUME DYNAMICS
SECTION 4 RELATED NEWS
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 BANCO BRADESCO PREFERENCE SHARES BEARISH SIGNALS
Downtrend: The preference stock dropped 3.0% on high volatility today.
+ The price sank 4.7% in the last month.
+ Compared with the Brazil Index 50 which fell 2.6% for the month, this represented a relative price decrease for Banco Bradesco Preference Shares' preference stock of 2.0% for the month.
Low Performance Indicator and rank of Banco Bradesco Preference Shares in the Brazilian market:
|Description||Value||Rank In Market|
|Price Change %||-3.0||In Bottom Quartile|
SECTION 2 BANCO BRADESCO PREFERENCE SHARES BULLISH SIGNALS
+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco Bradesco Preference Shares is R$3,312, including a capital gain of R$1,614 and dividend reinvested of R$697.
+ 10 years Multiplier in BRL = 3.312x
+ Compound Annual Growth Rate (CAGR) in BRL = 12.7%
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 $US1,380, including a capital gain of $US89 and dividend reinvested of $US291.
+ 10 years ago BRL 1 equalled USD 0.6145
+ 10 years Multiplier in USD = 1.38x
+ Compound Annual Growth Rate (CAGR) in USD = 3.3%
Aug 17, 2018: USD 1 equals BRL 3.91
2.2 Oversold/Bullish/Support Signals:
+ The preference stock is oversold according to the Williams % R indicator of -97.4, suggesting the price is close to its 14-day low of R$28.52.
High Performance Indicator and rank of Banco Bradesco Preference Shares in the Brazilian market:
|Description||Value||Rank In Market|
|Today's Trading Turnover||R$373.5 million (US$95.6 million)||In Top 2%|
+ The relative yield of Banco Bradesco Preference Shares, defined by its yield of 4%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.9% is 139.7%. This suggests Banco Bradesco Preference Shares preference stock is undervalued in dividend yield terms.
+ Net profit margin has averaged 13.6% in the last 3 years. This is better than the sector average of 11.3% and suggests a high margin of safety.
+ As per the Du Pont analysis, Return on Equity [ROE] of 15.0% is better than sector average of 10.4%. ROE 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.
2.4 Undervaluation [compared with sector average]:
+ Price to Book of 1.1 [1.4]. We estimate Banco Bradesco Preference Shares preference stock is trading at a current year Price to Book of 1.1 and a forward year Price to Book of 1.
+ Return on Equity 15.0% [10.4%].
+ Return on Assets 1.3% [1.1%].
+ Dividend yield of 4% [3.4%].
SECTION 3 BANCO BRADESCO PREFERENCE SHARES PRICE VOLUME DYNAMICS
+ Volume: there were 13,050,000 preference shares worth R$373.5 million (US$95.6 million) traded today. In the past week, volume was 1.0 times average and the preference shares were down 0.7%.
+ Banco Bradesco Preference Shares is at a discount of 24.1% to its 12-month high of R$37.73 on January 31. It is also at a premium of 16.9% to the 12-month low of R$24.48 on June 19.
+ The present value of R$1,000 (PV1000) invested one year ago in Banco Bradesco Preference Shares is R$1,059, comprising a capital gain of R$19 and dividend reinvested of R$40.
|Brazil Index 50||993||949||1,120|
3.2 Turnover Rate & Turnover Period:
+ The turnover rate in the 12 months to date was 95.9% (or a turnover period of 1 year 15 days). This average length of ownership of the preference stock at 0.8 times the average holding period of 1 year 3 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.
3.3 Moving Annual Return (Past 5 years)
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 Banco Bradesco Preference Shares would have produced a return of 6.0%.
|SA:BBDC4||Close (BRL)||Dividends (BRL)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||28.09||1.12||26.6||5||31.6|
|2 Yrs ago||22.19||0.97||41||6.2||47.2|
|3 Yrs ago||15.73||0.81||(16.5)||4.3||(12.2)|
|4 Yrs ago||18.85||0.64||31.3||4.5||35.8|
Close 5 years ago R$14.35
3.4 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 -9.5. The actual return of 4.97% fell short of the expected return of 14.5%, reflecting underperformance.
3.5 The Past Five Years
+ Banco Bradesco SA (SA:BBDC4), has advanced R$14.27 (or 99.4%) in the past five years to close at R$28.62 today. Compared with the Brazil Index 50 which has risen 50.1% over the same period, this is a relative price increase of 49.3%.
SECTION 4 BANCO BRADESCO PREFERENCE SHARES RELATED NEWS
+ BSS/News Bites:
Banco Bradesco SA is placed 122/268 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 55.
+ Vanguard Total World Stock ETF 2588:
The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 333,141 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-8,985,079 at an estimated Volume Weighted Average Price (VWAP) of $US26.9708. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US0 or 333,141% by value of the ETF's portfolio [Ranked 2269 out of 2588 by value and 16 out of 28 for Brazil].
SECTION 5 BANCO BRADESCO PREFERENCE SHARES GLOBAL RANKING
Global Rank [out of 47,645 stocks] and Rank of Banco Bradesco Preference Shares in the American Region [out of 11,858 stocks]
|Description||Value||Global Rank||In Am Region|
|Total Assets (US$)||305.5B||245||126|
|Net Profit (US$)||3.9B||262||123|
|Return on Equity %||15.0||7,691||1,556|
|Net Profit Margin %||12.7||9,510||2,235|
|Price to Book||1.2||14,805||2,309|
|PV1000 (1Year) USD*||868||23,999||6,624|
|US$* Change (1Year) %||-14.5||24,647||6,722|
* 1 year ago USD 1 = BRL 3.17
Aug 17, 2018: USD 1 equals BRL 3.91
SECTION 6 BANCO BRADESCO PREFERENCE SHARES SUMMARY FINANCIALS
6.1 Dividend History
+ Trailing 12 months dividend has improved from 64.08 centavos in 2014 to R$1.16 in 2018.
6.2 Financials Summary (Past 3 years)
|Year ended||Dec 2016||Dec 2015||Dec 2014|
|Sales (USD B)||51.8||39.1||26.6|
|Pretax (USD B)||7||2.5||5|
|Net (USD B)||3.9||4.6||3.9|
+ Net profit was down 16.8% from US$4.6 billion in 2015 to US$3.9 billion in 2016.
+ Earnings Per Share (EPS) was down 14.2% from R$2.83 to R$2.43.
SECTION 7 BANCO BRADESCO PREFERENCE SHARES PROFILE
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.
7.2 Top Management
The chief executive officer is Luiz Carlos Trabuco Cappi.
7.3 Issued Capital
Based on 3,359,928,872 issued shares the market capitalisation is R$96.2 billion (US$24.6 billion).
Contact: (11)3684 3749
Physical Address: Cidade de Deus s/n Vila Yara Osasco, SP 06029-900 Brazil
Country of Incorporation: Brazil
Exchange: BM&F BOVESPA
Business Sector: Banking & Investment Services
Industry Group: Banking Services
Economic Sector: Financials
SA:BBDC4; SAO:BBDC4; BZ:BBDC4; BBDC4.SA
Banco Bradesco S.A.