Brazilian stock report - Banco Bradesco preference

BRAZ

Banco Bradesco Preference Shares falls for a third consecutive day, a three-day fall of 2.0% July 21, 2017 18:00 BRT

NEWS BITES - BRIC

Banco Bradesco SA (SA:BBDC4), Brazil's 5th largest Bank by market cap, has fallen 12.0 centavos (0.4%) for a third consecutive day on Friday. This brought its three-day fall to 59.0 centavos (2.0%), compared with the Brazil Index 50 which fell 112.3 points (1.0%) in the three days for a relative price change of -0.9%. The cumulative volume in the 3 days was at about its average 3-day volume of 9.4 million preference shares. The preference stock last traded at R$29.28.

SECTION 1

BANCO BRADESCO PREFERENCE SHARES BEARISH SIGNALS

1.1 Fundamentals:

+ As per the Du Pont analysis, Return on Equity of 15.0% is lower than sector average of 15.8%. 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.

1.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 10.9 [5.6].

1.3 Technicals:

+ The price decreased 1.4% in the last week.

+ Compared with the Brazil Index 50 which fell 1.2% for the week, this represented a relative price decrease for Banco Bradesco Preference Shares preference stock of 0.2% for the week.

1.4 Overbought/Bearish/Resistance Signals:

+ The Stochastic indicator of 84.5 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

1.5 Low Performance Indicators:

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

SECTION 2

BANCO BRADESCO PREFERENCE SHARES BULLISH SIGNALS

2.1 Fundamentals:

+ The P/E of 10.9 multiplied by the P/NTA of 1.1 is 11.6. Being less than the Benjamin Graham benchmark of 22.5 the preference stock appears undervalued.

+ The relative yield of the preference stock, defined by its yield of 4.1%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.7% is 153.9%. This suggests the 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 11.5% and suggests a high margin of safety.

2.2 Undervaluation [compared with sector average]:

+ Dividend yield of 4.1% [3.2%].

2.3 Technicals:

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

+ The present value of R$1,000 (PV1000) invested one year ago in Banco Bradesco Preference Shares is R$1,224, comprising a capital gain of R$169 and dividend reinvested of R$55.

PV10001-week1-month1-year
BBDC4.SA9861,1281,224
Brazil Index 509881,0281,139

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco Bradesco Preference Shares is R$1,695, including a capital gain of R$337 and dividend reinvested of R$357.

+ 10 years Multiplier in BRL = 1.695x

+ Compound Annual Growth Rate (CAGR) in BRL = 5.4%

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 $US1,004, including a capital loss of $US208 and dividend reinvested of $US212.

+ 10 years ago BRL 1 equalled USD 0.5397

+ 10 years Multiplier in USD = 1.004x

Jul 21, 2017: USD 1 equals BRL 3.13

2.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverR$194.1 million (US$62.1 million)In Top 2%
EBITDA Margin %75.7In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 6,630,000 preference shares worth R$194.1 million (US$62.1 million) traded today. In the past week, volume was 0.9 times average and the preference shares were down 1.4%. The volume was 0.7 times the average daily trading volume of 9.4 million preference shares.

+ Banco Bradesco Preference Shares is at a discount of 8.3% to its 12-month high of R$31.94 on May 12. It is also at a premium of 23.8% to the 12-month low of R$23.66 on July 28, 2016.

3.2 Moving Annual Return

BBDC4Close (BRL)Dividends (BRL)Capital Gain %% YieldAnnual Return %
July 2129.281.2116.94.821.7
1 Yr ago25.051.0619.65.124.7
2 Yrs ago20.940.890.24.34.5
3 Yrs ago20.890.730.64.435.0
4 Yrs ago160.73.34.57.9

3.3 Beta & Alpha:

+ Beta: the Beta of Banco Bradesco Preference Shares preference stock is 1.3. 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 -0.9. The actual return of 20.11% fell short of the expected return of 21.0%, reflecting underperformance.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 73.1% (or a turnover period of 1 year 4 months). This average length of ownership of the preference stock at 0.9 times the average holding period of 1 year 5 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 47,513 stocks] and Rank in the American Region [out of 12,828 stocks]

DescriptionValueGlobal RankIn Am Region
MCap (US$)28.6B494228
Total Assets (US$)375.2B18492
Revenue (US$)64.3B14045
Net Profit (US$)4.8B176100
Return on Equity %15.07,2281,494
Net Profit Margin %12.78,9452,185
Price to Book1.111,6001,954
Price/Earnings11.05,182985
Yield %4.15,5531,667
PV$1000 (1Year) US$*1,28414,1013,502
US$* Change (1Year) %27.512,6033,168

* 1 year ago USD 1 = BRL 3.25

Jul 21, 2017: USD 1 equals BRL 3.13

SECTION 5

BANCO BRADESCO PREFERENCE SHARES FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)63.347.932.6
Pretax (USD B)8.536.1
Net (USD B)4.75.74.8
EPS (BRL)2.67663.11822.3967

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (centavos)
21 Jul 2017121.08
21 Jul 2016106.33
21 Jul 201588.94
21 Jul 201470.49
21 Jul 201370.21

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
Business SectorBanking & Investment Services
Industry GroupBanking Services
IndustryBanks
Economic SectorFinancials

6.3 Issued Capital

Based on 3,054,480,793 issued shares the market capitalisation is R$89.4 billion (US$28.6 billion).

SECTION 7

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

February 07: Banco Bradesco Preference Shares announces EGM

February 07: Banco Bradesco Preference Shares announces AGM

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