Brazilian stock report - Banco do Brasil

BRAZ

Banco do Brasil increases on average volume October 20, 2017 18:00 BRST

NEWS BITES - BRIC

Banco do Brasil SA (SA:BBAS3), Brazil's 5th largest Bank by market cap, has increased 33.0 centavos (0.9%) from its last trading session of October 19 to close at R$37.51. Compared with the Brazil Index 50 which rose 11.5 points (0.09%) in the day, the relative price increase was 0.8%. The volume of 7.1 million shares was close to average trading.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Technicals, High Performance Indicators

SECTION 2 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals, Low Performance Indicators

SECTION 3 PRICE VOLUME DYNAMICS

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

SECTION 4 RANKING

Global, Independent Ratings

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 DO BRASIL BULLISH SIGNALS

1.1 Fundamentals:

+ The P/E of 13.2 multiplied by the P/NTA of 1.4 is 18.9. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

+ Brandirectory have estimated Banco do Brasil brand value at R$31.6 billion (US$9.9 billion). The Brand Value represents an impressive 24.1% of the estimated Enterprise Value of R$131.1 billion (US$41 billion).

1.2 Technicals:

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 36.98 minus the 26-day EMA of 35.89 is positive 1.08 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ The stock's relative price strength percentile is rising at 54 for 6 months, 76 for 3 months and 84 for 1 month.

+ The present value of R$1,000 (PV1000) invested one year ago in Banco do Brasil is R$1,396, comprising a capital gain of R$357 and dividend reinvested of R$39.

PV10001-week1-month1-year
BBAS3.SA1,0021,0791,396
Brazil Index 509921,0281,194

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco do Brasil is R$2,916, including a capital gain of R$904 and dividend reinvested of R$1,012.

+ 10 years Multiplier in BRL = 2.916x

+ Compound Annual Growth Rate (CAGR) in BRL = 11.3%

Present Value of USD1,000 invested 10 years ago:

+ The present value of USD1,000 (PV1000) invested ten years ago in Banco do Brasil is $US1,651, including a capital gain of $US78 and dividend reinvested of $US573.

+ 10 years ago BRL 1 equalled USD 0.5531

+ 10 years Multiplier in USD = 1.651x

+ Compound Annual Growth Rate (CAGR) in USD = 5.1%

Oct 20, 2017: USD 1 equals BRL 3.19

1.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverR$259.6 million (US$81.3 million)In Top 3%
Price/MAP501.11In Top Quartile
Volatility %1.1In Top Quartile
Total Debt to Equity0.2In Top Quartile

SECTION 2 BANCO DO BRASIL BEARISH SIGNALS

2.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 2.2%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.2% is 97.3%. This suggests the stock is overvalued in dividend yield terms.

+ Total Liabilities/EBITDA of 91.4 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ Net profit margin has averaged 8.3% in the last 3 years. This is lower than the sector average of 10% and suggests a low margin of safety.

+ As per the Du Pont analysis, Return on Equity of 9.6% is lower than sector average of 12.1%. This is computed as net profit margin of 5.8% times asset turnover [sales/assets] of 0.15 times leverage factor [total assets/shareholders' equity] of 16.7.

2.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 13.2 [8.4].

+ Return on Equity 9.6% [12.1%].

+ Return on Assets 0.7% [1.1%].

+ Dividend yield of 2.2% [2.9%].

2.3 Technicals:

+ The 0.6% discount to 12-month high of R$37.75 against the 65.8% premium to 12-month low of R$22.62 suggests the climb might be peaking.

2.4 Overbought/Bearish/Resistance Signals:

+ The Relative Strength Index (RSI) of 78.6 has penetrated the overbought line of 70, suggesting the price gain of 7.5% in the last 14 days is unusually high.

+ The stock is overbought according to the Williams % R indicator of -7.5, suggesting the price is close to its 14-day high of R$37.75.

2.5 Low Performance Indicators:

DescriptionValueRank In Market
Return on Assets [ROA] %0.7In Bottom 9%
Return on Capital Employed [ROCE] %3.6In Bottom Quartile

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Momentum:

+ Volume: there were 6,920,000 shares worth R$259.6 million (US$81.3 million) traded today. In the past week, volume was 0.8 times average and the shares were up 0.2%.

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 BBAS3 would have produced a return of 38.7%.

BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Oct 2037.510.8235.7338.7
1 Yr ago27.631.1776.67.584.1
2 Yrs ago15.651.88(42.2)7(35.3)
3 Yrs ago27.081.6420.77.327.9
4 Yrs ago22.442.3938.114.752.8

Close 5 years ago R$16.25

3.3 Beta:

+ Beta: the Beta of Banco do Brasil stock is 1.8. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

3.4 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 49.9% (or a turnover period of 2 years ). This average length of ownership of the stock at 1.2 times the average holding period of 1 year 7 months for stocks in the Brazil Index 50 suggests a larger number of core investors, making a long-term investment safer.

SECTION 4 RANKING

4.1 Global Rank [out of 47,824 stocks] and Rank in the American Region [out of 12,760 stocks]

DescriptionValueGlobal RankIn Am Region
MCap (US$)33.7B436207
Total Assets (US$)440.6B18292
Revenue (US$)64.8B14245
Net Profit (US$)2.5B368180
Return on Equity %9.613,6432,629
Net Profit Margin %5.816,4213,416
Price to Book1.414,9962,627
Price/Earnings13.17,6791,230
Yield %2.210,9382,717
PV$1000 (1Year) US$*1,3929,4812,409
US$* Change (1Year) %37.59,7772,485

* 1 year ago USD 1 = BRL 3.17

Oct 20, 2017: USD 1 equals BRL 3.19

4.2 Independent Ratings

Banco do Brasil SA was ranked 41 in the Brand Finance list of the world's 500 Valuable Banking brands by brand value in 2015; a deterioration over a year from rank 35 in 2014. Brand Finance valued the brand at US$6,549 million and ranked it Number 41 in South America. Most of the brand valuation was for services such as Commercial/ Wholesale.

It was ranked 67 in SNL's list of Top 100 Banks by Total Assets in 2016; a deterioration over a year from rank 55 in 2015.

It is the 115th largest by revenue in the Forbes Global 2000.

It was ranked 206 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2014. It had outstanding scores of 72.3% in Carbon productivity, 48.7% in Energy productivity and 33% in Water productivity.

It is placed 96/250 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 62.

SECTION 5 BANCO DO BRASIL FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)65.271.653.7
Pretax (USD B)4.53.94.9
Net (USD B)2.54.63.8
EPS (BRL)2.845.054.23

Net profit was down 44.2% from US$4.6 billion in 2015 to US$2.5 billion in 2016. Earnings Per Share (EPS) was down 43.8% from R$5.05 to R$2.84.

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

Favourable Changes:

+ Tier 1 Ratio up from 11.4% to 12.8%.

+ Tier 2 Ratio up from 4.7% to 5.7%.

+ Net tangible assets per share up 3% from BRL26.21 ($US6.6) to BRL27 ($US8.3).

+ Non-Performing loans to Net loans deteriorated from 9.14% to 9.74%.

Unfavourable Changes:

+ Net profit slumps 35.7% from BRL14.1b ($US3.5b) to BRL9.0b ($US2.8b)

+ Total income down 52% from BRL204.8b ($US51.4b) to BRL98.4b ($US30.2b).

+ EPS slumps 36.4% from BRL5.03 ($US1.26) to BRL3.2 (US98.21c).

+ Return on Equity down from 19.7% to 10.8%.

+ Net Loans down 10.1% to BRL563.1b ($US173.1b).

Note:

+ Operating income to total assets steady at 0.1.

+ Deposits steady at BRL430.6b ($US132.4b).

5.3 Trailing 12 Months Dividends

Trailing 12 Months ToValue (centavos)
20 Oct 201782.31
20 Oct 2016116.68
20 Oct 2015188.36
20 Oct 2014163.73
20 Oct 2013239.09

SECTION 6 BANCO DO BRASIL PROFILE

6.1 Activities

Banco do Brasil S.A. attracts deposits and offers retail and commercial banking services. The Bank offers consumer, commercial, and agribusiness loans, asset management, foreign exchange, private pension, insurance, lease financing, credit cards, and Internet banking services.

6.2 Industry & Sector

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

6.3 Issued Capital

Based on 2,865,417,020 issued shares the market capitalisation is R$107.5 billion (US$33.7 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

September 18: Banco do Brasil announces dividend

Banco do Brasil today announced a cash dividend of 7.63 centavos per share. The ex dividend date is Tuesday, September 12, 2017 and the record date is Monday, September 11, 2017 and it is payable on Friday, September 29.

August 28: Banco do Brasil announces dividend

Banco do Brasil today announced a cash dividend of 20.11 centavos per share. The ex dividend date is Tuesday, August 22, 2017 and the record date is Monday, August 21, 2017 and it is payable on Thursday, August 31.

February 10: Banco do Brasil announces AGM

Banco do Brasil has announced its Annual General Meeting will take place on Tuesday, April 25.

Contact: (21)3808 3715

Physical Address: SBS Q-4 Bloco 3 Lote 32 Plano Piloto Brasilia, DF 70089-900 Brazil

State/Province/Country: Brazil

Country of Incorporation: Brazil

Exchange: BM&F BOVESPA

ISIN: BRBBASACNOR3

SA:BBAS3; SAO:BBAS3; BZ:BBAS3; BBAS3.SA

PermID: 4295859896

Banco Do Brasil S.A., Banco Do Brasil Sa

Source: www.BuySellSignals.com