Brazilian stock report - Banco do Brasil

BRAZ

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

1.1 Fundamentals:

+ 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%].

1.3 Technicals:

+ 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:

DescriptionValueRank In Market
Total Debt to Equity0.2In Top 2%
Today's TurnoverR$448.7 million (US$119.8 million)In Top 3%
Price Change %2.9In Top Quartile

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 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%].

2.3 Technicals:

+ In the last three months the stock has hit a new 52-week low thrice.

2.4 Low Performance Indicator:

DescriptionValueRank In Market
Return on Assets [ROA] %0.7In Bottom 9%

SECTION 3 BANCO DO BRASIL PRICE VOLUME DYNAMICS

3.1 Technicals:

+ 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.

PV10001-week1-month1-year
BBAS3.SA1,0198511,076
Brazil Index 501,0019471,187

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:BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Jun 20271.23.84.68.5
1 Yr ago260.8167.15.272.3
2 Yrs ago15.561.18(25.1)5.7(19.4)
3 Yrs ago20.772.02(3.9)9.35.4
4 Yrs ago21.612.3130.81444.7

Close 5 years ago R$16.53

3.3 Beta:

+ 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]

DescriptionValueGlobal RankIn Am Region
MCap (US$)20.6B748337
Total Assets (US$)374B20298
Revenue (US$)55B19466
Net Profit (US$)2.1B555261
Return on Equity %9.614,3432,684
Net Profit Margin %5.817,0093,404
Price to Book1.011,7661,911
Price/Earnings9.24,560791
Yield %4.65,7771,595
PV$1000 (1Year) US$*94726,0526,925
US$* Change (1Year) %-14.826,8737,037

* 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 endedDec 2016Dec 2015Dec 2014
Sales (USD B)54.259.444.6
Pretax (USD B)3.83.24.1
Net (USD B)2.13.83.1
EPS (BRL)2.845.054.23

+ 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

7.1 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.

7.2 Issued Capital

Based on 2,865,417,020 issued shares the market capitalisation is R$77.4 billion (US$20.6 billion).

COMPANY IDENTIFIERS

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

Economic Sector: Financials

Business Sector: Banking & Investment Services

Industry Group: Banking Services

Industry: Banks

ISIN: BRBBASACNOR3

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

PermID: 4295859896

RIC: BBAS3.SA

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

Source: www.BuySellSignals.com