Brazilian stock report - Banco do Brasil

BRAZ

Banco do Brasil keeps rising, up 3.0% in 3 days January 15, 2018 18:00 BRST

NEWS BITES - BRIC

Banco do Brasil SA (SA:BBAS3), Brazil's 6th largest Bank by market cap, extended its gains on Monday, rising an additional 17.0 centavos (0.5%) to close at R$34.30. The shares have lifted R$1.01 (3.0%) over the past three trading days, compared with the Brazil Index 50 which rose 260.0 points (2.0%) in the three days for a relative price increase of 1.0%. The cumulative volume in the 3 days was at about its average 3-day volume of 7.3 million shares.

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

Fundamentals, Undervaluation [compared with sector average], Technicals, High Performance Indicators, A positive finish to 2017

SECTION 2 BEARISH SIGNALS

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

SECTION 3 PRICE VOLUME DYNAMICS

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

SECTION 4 RANKING

Global, Independent Ratings

SECTION 5 FINANCIALS

Financials Summary, 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 12.1 multiplied by the P/NTA of 1.3 is 15.8. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

+ The relative yield of the stock, defined by its yield of 2.8%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.3% is 118.5%. This suggests the stock is undervalued in dividend yield terms.

+ Brandirectory have estimated Banco do Brasil brand value at R$31.7 billion (US$9.9 billion). The Brand Value represents an impressive 26.0% of the estimated Enterprise Value of R$121.9 billion (US$38 billion).

1.2 Undervaluation [compared with sector average]:

+ Price to Book of 1.3 [1.5]. We estimate Banco do Brasil stock is trading at a current year Price to Book of 1.3 and a forward year Price to Book of 1.2.

1.3 Technicals:

+ The price increased 1.6% in the last week and soared 12.3% in the last month.

+ Compared with the Brazil Index 50 which rose 0.5% for the week and 10.2% for the month, this represented a relative price increase for Banco do Brasil stock of 1.1% for the week and 2.0% for the month.

+ The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 33.35 minus the 26-day EMA of 32.75 is positive 0.6 suggesting a bullish signal. Both EMA prices are rising, another bullish signal.

+ Rises to Falls: in the past month the number of rises outnumbered falls 14:4 or 3.5:1.

+ The present value of R$1,000 (PV1000) invested one year ago in Banco do Brasil is R$1,260, comprising a capital gain of R$222 and dividend reinvested of R$38.

PV10001-week1-month1-year
BBAS3.SA1,0161,1231,260
Brazil Index 501,0051,0631,261

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco do Brasil is R$2,480, including a capital gain of R$641 and dividend reinvested of R$839.

+ 10 years Multiplier in BRL = 2.48x

+ Compound Annual Growth Rate (CAGR) in BRL = 9.5%

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 $US1,355, including a capital loss of $US103 and dividend reinvested of $US458.

+ 10 years ago BRL 1 equalled USD 0.571

+ 10 years Multiplier in USD = 1.355x

+ Compound Annual Growth Rate (CAGR) in USD = 3.1%

Jan 15, 2018: USD 1 equals BRL 3.21

1.4 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverR$179.7 million (US$56.1 million)In Top 3%
Volatility %0.9In Top 9%
Total Debt to Equity0.2In Top Quartile
Price/MAP501.07In Top Quartile

1.5 A positive finish to 2017

The stock has climbed R$4.17 (or 15.1%) in FY 2017 bringing its two-year rise to 126.6%. The stock last traded at R$31.82. The average daily volume of 7.3 million shares in FY 2017 was 0.8 times the average daily volume in FY 2016.

SECTION 2 BANCO DO BRASIL BEARISH SIGNALS

2.1 Fundamentals:

+ 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 10.8% 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 13.3%. 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 12.1 [7.6].

+ Return on Equity 9.6% [13.3%].

+ Return on Assets 0.7% [1.3%].

+ Dividend yield of 2.8% [3.6%].

2.3 Technicals:

Overbought/Bearish/Resistance Signals:

+ The Relative Strength Index (RSI) of 84.9 has penetrated the overbought line of 70, suggesting the price gain of 9.6% in the last 14 days is unusually high.

+ The stock is overbought according to the Williams % R indicator of -4.4, suggesting the price is close to its 14-day high of R$34.45.

2.4 Low Performance Indicators:

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

SECTION 3 PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 5,240,000 shares worth R$179.7 million (US$56.1 million) traded today. In the past week, volume was 0.9 times average and the shares were up 1.6%. The volume was 0.7 times the average daily trading volume of 7.3 million shares.

+ Banco do Brasil is at a discount of 9.3% to its 12-month high of R$37.83 on October 26, 2017. It is also at a premium of 37.5% to the 12-month low of R$24.95 on May 18, 2017.

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 25.6%.

BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Jan 1534.30.9422.23.425.6
1 Yr ago28.060.91125.17.3132.4
2 Yrs ago12.471.93(34.6)10.1(24.4)
3 Yrs ago19.051.663.2912.2
4 Yrs ago18.462.36(2.5)12.59.9

Close 5 years ago R$18.94

3.3 Beta:

+ Beta: the Beta of Banco do Brasil stock is 1.9. 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 58.8% (or a turnover period of 1 year 8 months). This average length of ownership of the stock at 1.0 times the average holding period of 1 year 8 months for 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

4.1 Global Rank [out of 47,410 stocks] and Rank in the American Region [out of 12,006 stocks]

DescriptionValueGlobal RankIn Am Region
MCap (US$)30.7B507231
Total Assets (US$)435.8B18896
Revenue (US$)64.1B14545
Net Profit (US$)2.5B391189
Return on Equity %9.613,9352,610
Net Profit Margin %5.816,6313,315
Price to Book1.313,7432,325
Price/Earnings12.05,9581,024
Yield %2.88,9792,315
PV$1000 (1Year) US$*1,26118,2313,859
US$* Change (1Year) %18.018,5983,896

* 1 year ago USD 1 = BRL 3.23

Jan 15, 2018: USD 1 equals BRL 3.21

4.2 Independent Ratings

+ S&P Global Market Intelligence 100:

Banco do Brasil SA 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.

+ Fortune 500:

It was ranked 151 by total revenues in the Fortune 500 annual list for 2017; a deterioration over a year from rank 115 in 2016.

+ Brand Finance 500:

It 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.

+ Forbes 2000:

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

+ BSS/News Bites:

It is placed 139/267 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 48.

+ Vanguard Total World Stock ETF 7457:

The stock was one of 7457 global stocks selected by Vanguard Total World Stock ETF (VT). As at November 30, 2017, the Vanguard Total World Stock ETF held 292,193 shares worth $US2,906,462 or 0.02% by value of the ETF's portfolio [Ranked 869 out of 7457 by value and 9 out of 121 for Brazil].

SECTION 5 BANCO DO BRASIL FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)64.170.352.8
Pretax (USD B)4.53.84.9
Net (USD B)2.54.53.7
EPS (BRL)2.845.054.23

Net profit was down 44.2% from US$4.5 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 Trailing 12 Months Dividends

Trailing 12 Months ToValue (centavos)
15 Jan 201894.21
15 Jan 201790.83
15 Jan 2016193.32
15 Jan 2015165.67
15 Jan 2014236.31

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
Economic SectorFinancials
Business SectorBanking & Investment Services
Industry GroupBanking Services
IndustryBanks

6.3 Issued Capital

Based on 2,865,417,020 issued shares the market capitalisation is R$98.3 billion (US$30.7 billion).

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

December 18 2017: Banco do Brasil announces dividend

Banco do Brasil today announced a cash dividend of 8.26 centavos per share. The ex dividend date is Tuesday, December 12, 2017 and the record date is Monday, December 11, 2017 and it is payable on Thursday, December 28.

November 27 2017: Banco do Brasil announces dividend

Banco do Brasil today announced a cash dividend of 22.32 centavos per share. The ex dividend date is Wednesday, November 22, 2017 and the record date is Tuesday, November 21, 2017 and it is payable on Thursday, November 30.

September 18 2017: 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 2017: 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 2017: 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