Brazilian stock report - Banco do Brasil
Banco do Brasil up 10.1% in 2 days June 20, 2018 18:00 BRT
NEWS BITES - BRIC
Banco do Brasil SA (SA:BBAS3), Brazil's 6th largest Bank by market cap, extended its gains on Wednesday, rising an additional 76.0 centavos (2.9%) to close at R$27.0. The shares have soared R$2.48 (10.1%) over the past two trading days, compared with the Brazil Index 50 which rose 383.4 points (3.3%) in the two days for a relative price increase of 6.8%. The 2-day rise was fuelled by a cumulative volume of 1.8 times the average 2-day volume of 8.8 million shares.
Highlights in today's Report:
SECTION 1 BULLISH SIGNALS
SECTION 2 BEARISH SIGNALS
SECTION 3 PRICE VOLUME DYNAMICS
SECTION 4 RELATED NEWS
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 BANCO DO BRASIL BULLISH SIGNALS
+ The P/E of 9.5 multiplied by the P/NTA of 1 is 9.8. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.
+ The relative yield of Banco do Brasil, defined by its yield of 4.4%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 2.7% is 166.3%. This suggests Banco do Brasil stock is undervalued in dividend yield terms.
+ Brandirectory have estimated Banco do Brasil's brand value at R$37 billion (US$9.9 billion). The Brand Value represents an impressive 36.7% of the estimated Enterprise Value of R$101 billion (US$27 billion).
1.2 Undervaluation [compared with sector average]:
+ Price to Book of 1 [1.3]. We estimate Banco do Brasil stock is trading at a current year Price to Book of 1 and a forward year Price to Book of 1.
+ Dividend yield of 4.4% [3.5%].
+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco do Brasil is R$1,994, including a capital gain of R$365 and dividend reinvested of R$628.
+ 10 years Multiplier in BRL = 1.994x
+ Compound Annual Growth Rate (CAGR) in BRL = 7.1%
Jun 20, 2018: USD 1 equals BRL 3.75
1.4 Oversold/Bullish/Support Signals:
+ The Stochastic indicator of 14.5 has pierced the oversold line of 20; this indicates the price is close to its 14-day low and is likely to revert to an uptrend.
1.5 High Performance Indicators:
|Description||Value||Rank In Market|
|Total Debt to Equity||0.2||In Top 2%|
|Today's Turnover||R$448.7 million (US$119.8 million)||In Top 3%|
|Price Change %||2.9||In Top Quartile|
SECTION 2 BANCO DO BRASIL BEARISH SIGNALS
+ 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 11.2% 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 13.7%. 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 9.5 [6.4].
+ Return on Assets 0.7% [1.3%].
+ In the last three months the stock has hit a new 52-week low thrice.
2.4 Low Performance Indicator:
|Description||Value||Rank In Market|
|Return on Assets [ROA] %||0.7||In Bottom 9%|
SECTION 3 BANCO DO BRASIL PRICE VOLUME DYNAMICS
+ Volume: there were 16,620,000 shares worth R$448.7 million (US$119.8 million) traded today. In the past week, volume was 2.0 times average and the shares were up 1.9%. The rise has been propped up by robust volume of 1.9 times the average daily volume of 8.8 million shares.
+ Banco do Brasil is at a discount of 39.0% to its 12-month high of R$44.30 on March 08. It is also at a premium of 11.8% to the 12-month low of R$24.14 on June 19.
+ The present value of R$1,000 (PV1000) invested one year ago in Banco do Brasil is R$1,076, comprising a capital gain of R$38 and dividend reinvested of R$37.
|Brazil Index 50||1,001||947||1,187|
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 Banco do Brasil would have produced a return of 8.5%.
|SA:BBAS3||Close (BRL)||Dividends (BRL)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||26||0.81||67.1||5.2||72.3|
|2 Yrs ago||15.56||1.18||(25.1)||5.7||(19.4)|
|3 Yrs ago||20.77||2.02||(3.9)||9.3||5.4|
|4 Yrs ago||21.61||2.31||30.8||14||44.7|
Close 5 years ago R$16.53
+ Beta: the Beta of Banco do Brasil stock is 1.6. 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 96.7% (or a turnover period of 1 year 11 days). This average length of ownership of the stock at 0.8 times the average holding period of 1 year 2 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.
3.5 The Past Two Years
+ Banco do Brasil SA (SA:BBAS3), extended its gains in the past year, rising an additional R$1.0 (3.8%) to close at R$27.0 today. In the previous year the shares rose R$9.91 (61.6%). The shares have lifted R$10.91 (67.8%) over the past two years, compared with the Brazil Index 50 which rose 3,595.4 points (42.5%) in the two years for a relative price increase of 25.3%.
SECTION 4 BANCO DO BRASIL RELATED NEWS
4.1 Corporate Wires
Banco do Brasil (BBAS3) issued 1 new Release this week.
June 18: Banco do Brasil announces dividend
Banco do Brasil today announced a cash dividend of 7.72 centavos per share. The ex dividend date is Tuesday, June 12, 2018 and the record date is Monday, June 11, 2018 and it is payable on Friday, June 29.
To view the previous 3 months' Releases in full, click here
4.2 Other News
+ BSS/News Bites:
Banco do Brasil SA is placed 123/258 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 53.
+ Vanguard Total World Stock ETF 7581:
The stock was one of 7581 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 92,800 shares in the period Jan 31, 2018 to Apr 30, 2018 worth $US3,573,904 at an estimated Volume Weighted Average Price (VWAP) of $US38.5119. As at Apr 30, 2018, the Vanguard Total World Stock ETF held 398,293 shares worth $US4,436,121 or 0.03% by value of the ETF's portfolio [Ranked 687 out of 7581 by value and 5 out of 101 for Brazil].
SECTION 5 BANCO DO BRASIL GLOBAL RANKING
Global Rank [out of 47,592 stocks] and Rank in the American Region [out of 11,863 stocks]
|Description||Value||Global Rank||In Am Region|
|Total Assets (US$)||374B||202||98|
|Net Profit (US$)||2.1B||555||261|
|Return on Equity %||9.6||14,343||2,684|
|Net Profit Margin %||5.8||17,009||3,404|
|Price to Book||1.0||11,766||1,911|
|PV$1000 (1Year) US$*||947||26,052||6,925|
|US$* Change (1Year) %||-14.8||26,873||7,037|
* 1 year ago USD 1 = BRL 3.3
Jun 20, 2018: USD 1 equals BRL 3.75
SECTION 6 BANCO DO BRASIL SUMMARY FINANCIALS
6.1 Dividend History
+ Trailing 12 months dividend has deteriorated from R$2.31 in 2014 to R$1.20 in 2018.
6.2 Financials Summary
|Year ended||Dec 2016||Dec 2015||Dec 2014|
|Sales (USD B)||54.2||59.4||44.6|
|Pretax (USD B)||3.8||3.2||4.1|
|Net (USD B)||2.1||3.8||3.1|
+ Net profit was down 44.2% from US$3.8 billion in 2015 to US$2.1 billion in 2016.
+ Earnings Per Share (EPS) was down 43.8% from R$5.05 to R$2.84.
SECTION 7 BANCO DO BRASIL PROFILE
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.
7.2 Issued Capital
Based on 2,865,417,020 issued shares the market capitalisation is R$77.4 billion (US$20.6 billion).
Contact: (21)3808 3715
Physical Address: SBS Q-4 Bloco 3 Lote 32 Plano Piloto Brasilia, DF 70089-900 Brazil
Country of Incorporation: Brazil
Exchange: BM&F BOVESPA
Economic Sector: Financials
Business Sector: Banking & Investment Services
Industry Group: Banking Services
SA:BBAS3; SAO:BBAS3; BZ:BBAS3; BBAS3.SA
Banco Do Brasil S.A., Banco Do Brasil Sa