Brazilian stock report - Banco do Brasil

BRAZ

Banco do Brasil drops 2.4% July 26, 2017 18:00 BRT

NEWS BITES - BRIC

Banco do Brasil SA (SA:BBAS3), Brazil's 6th largest Bank by market cap, has dropped 72.0 centavos (2.4%) from its last trading session of July 25 to close at R$28.84. Compared with the Brazil Index 50 which fell 113.8 points (1%) in the day, the relative price change was -1.4%. The volume was 0.7 times the average daily trading volume of 7 million shares.

SECTION 1

BANCO DO BRASIL BEARISH SIGNALS

1.1 Fundamentals:

+ Net profit margin has averaged 9% in the last 3 years. This is lower than the sector average of 11.5% and suggests a low margin of safety.

+ As per the Du Pont analysis, Return on Equity of 10.8% is lower than sector average of 15.8%. This is computed as net profit margin of 6.7% times asset turnover [sales/assets] of 0.07 times leverage factor [total assets/shareholders' equity] of 16.7.

1.2 Overvaluation [compared with sector average]:

+ Price/Earnings of 9 [5.7].

+ Return on Equity 10.8% [15.8%].

+ Return on Assets 0.8% [1.3%].

+ Dividend yield of 2.8% [3.2%].

1.3 Technicals:

Downtrend: The stock dropped 2.4% on high volatility today.

+ The price decreased 1.8% in the last week.

+ Compared with the Brazil Index 50 which fell 0.3% for the week, this represented a relative price decrease for Banco do Brasil stock of 1.5% for the week.

1.4 Overbought/Bearish/Resistance Signals:

+ The Stochastic indicator of 80.2 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
Price Change %-2.4In Bottom Quartile
Return on Assets [ROA] %0.8In Bottom Quartile
Total Debt to Equity6.8In Bottom 3%
Price/Earnings/Growth3.8In Bottom 2%

SECTION 2

BANCO DO BRASIL BULLISH SIGNALS

2.1 Fundamentals:

+ The P/E of 9 multiplied by the P/NTA of 1.1 is 9.9. 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 2.7% is 104.5%. This suggests the stock is undervalued in dividend yield terms.

+ Brandirectory have estimated Banco do Brasil brand value at R$31.3 billion (US$9.9 billion). The Brand Value represents 5.4% of the estimated Enterprise Value of R$582.2 billion (US$184 billion).

2.2 Technicals:

+ In the last three months the stock has hit a new 52-week high once.

+ The present value of R$1,000 (PV1000) invested one year ago in Banco do Brasil is R$1,426, comprising a capital gain of R$382 and dividend reinvested of R$44.

PV10001-week1-month1-year
BBAS3.SA9821,0691,426
Brazil Index 509971,0291,141

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco do Brasil is R$2,231, including a capital gain of R$438 and dividend reinvested of R$792.

+ 10 years Multiplier in BRL = 2.231x

+ Compound Annual Growth Rate (CAGR) in BRL = 8.3%

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 $US1,298, including a capital loss of $US163 and dividend reinvested of $US461.

+ 10 years ago BRL 1 equalled USD 0.5434

+ 10 years Multiplier in USD = 1.298x

+ Compound Annual Growth Rate (CAGR) in USD = 2.6%

Jul 26, 2017: USD 1 equals BRL 3.16

2.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverR$148.5 million (US$46.9 million)In Top 3%
EBITDA Margin %75.8In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 5,150,000 shares worth R$148.5 million (US$46.9 million) traded today. In the past week, volume was 0.8 times average and the shares were down 1.8%.

+ Banco do Brasil is at a discount of 17.7% to its 12-month high of R$35.05 on May 12. It is also at a premium of 48.5% to the 12-month low of R$19.41 on August 03, 2016.

3.2 Moving Annual Return

BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
July 2628.840.8138.23.942.1
1 Yr ago20.871.1812.36.418.7
2 Yrs ago18.582.02(24.1)8.2(15.8)
3 Yrs ago24.472.3143.513.557.0
4 Yrs ago17.061.7225.912.738.5

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 58.97% (or a turnover period of 1 year 8 months). This average length of ownership of the stock at 1.2 times the average holding period of 1 year 5 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 47,603 stocks] and Rank in the American Region [out of 12,817 stocks]

DescriptionValueGlobal RankIn Am Region
MCap (US$)26.1B525240
Total Assets (US$)442.4B16785
Revenue (US$)31.1B419178
Net Profit (US$)2.9B318162
Return on Equity %10.811,6112,260
Net Profit Margin %6.714,6943,175
Price to Book1.112,4062,133
Price/Earnings9.23,997768
Yield %2.78,9472,310
PV$1000 (1Year) US$*1,4717,5451,849
US$* Change (1Year) %68.34,9191,270

* 1 year ago USD 1 = BRL 3.29

Jul 26, 2017: USD 1 equals BRL 3.16

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 78/264 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 71.

SECTION 5

BANCO DO BRASIL FINANCIALS

5.1 Financials Summary

Year endedDec 2016Dec 2015Dec 2014
Sales (USD B)31.565.554.3
Pretax (USD B)4.63.25
Net (USD B)2.94.53.8
EPS (BRL)3.19515.034.23

5.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (centavos)
26 Jul 201780.92
26 Jul 2016118.34
26 Jul 2015201.74
26 Jul 2014230.7
26 Jul 2013171.55

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$82.6 billion (US$26.1 billion).

SECTION 7

STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

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