Brazilian stock report - Banco do Brasil

BRAZ

Banco do Brasil up 3.4% in 2 days September 21, 2018 18:00 BRT

NEWS BITES - BRIC

Banco do Brasil SA (SA:BBAS3), Brazil's 5th largest Bank by market cap, extended its gains on Friday, rising an additional 92.0 centavos (3.1%) to close at R$30.42. The shares have lifted R$1.0 (3.4%) over the past two trading days, compared with the Brazil Index 50 which rose 193.2 points (1.5%) in the two days for a relative price increase of 1.9%. The cumulative volume in the 2 days was at about its average 2-day volume of 9.8 million shares. Its MCap is R$87.2 billion (US$21.1 billion).

Highlights in today's Report:

SECTION 1 BULLISH SIGNALS

SECTION 2 BEARISH SIGNALS

SECTION 3 PRICE VOLUME DYNAMICS

SECTION 4 RELATED NEWS

SECTION 5 SUMMARY FINANCIALS

SECTION 6 PROFILE

SECTION 1 BANCO DO BRASIL BULLISH SIGNALS

1.1 Technicals:

+ The price soared 10.6% in the last week and climbed 5.4% in the last month.

+ The present value of BRL1,000 (PV1000) invested ten years ago in Banco do Brasil is R$2,943, including a capital gain of R$1,001 and dividend reinvested of R$942.

+ 10 years Multiplier in BRL = 2.943x

+ Compound Annual Growth Rate (CAGR) in BRL = 11.4%

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 $US1,320, including a capital loss of $US99 and dividend reinvested of $US420.

+ 10 years ago BRL 1 equalled USD 0.5379

+ 10 years Multiplier in USD = 1.32x

+ Compound Annual Growth Rate (CAGR) in USD = 2.8%

Sep 21, 2018: USD 1 equals BRL 4.13

High Performance Indicators and rank of Banco do Brasil in the Brazilian market:

DescriptionValueRank In Market
Total Debt to Equity0.01In Top 2%
Today's Trading TurnoverR$372.6 million (US$90.2 million)In Top 3%
Price Change %3.1In Top Quartile
EPS Growth %51.6In Top Quartile
P/E * P/NTA7.4In Top Quartile

1.2 Fundamentals:

+ The P/E of 8 multiplied by the P/NTA of 0.9 is 7.4. 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 4.2%, divided by average yield of dividend yielding stocks in the Brazil Index 50 of 3.0% is 138.7%. This suggests Banco do Brasil stock is undervalued in dividend yield terms.

+ Brandirectory have estimated Banco do Brasil's brand value at R$40.8 billion (US$9.9 billion). The Brand Value represents an impressive 52.1% of the estimated Enterprise Value of R$78.4 billion (US$19 billion).

+ As per the Du Pont analysis, Return on Equity [ROE] of 13.8% is better than sector average of 10.3%. ROE is computed as net profit margin of 8.8% times asset turnover [sales/assets] of 0.11 times leverage factor [total assets/shareholders' equity] of 13.4.

1.3 Undervaluation [compared with sector average]:

+ Price/Earnings of 8 [9.6]. We estimate Banco do Brasil stock is trading at a current year P/E of 7.3 and a forward year P/E of 6.5.

+ Price to Book of 0.9 [1.4]. We estimate Banco do Brasil stock is trading at a current year Price to Book of 0.8 and a forward year Price to Book of 0.7.

+ Return on Equity 13.8% [10.3%].

+ Year-on-Year Earnings Growth of 51.6% [28.8%].

+ Dividend yield of 4.2% [3.6%].

SECTION 2 BANCO DO BRASIL BEARISH SIGNALS

2.1 Technicals:

+ The present value of R$1,000 (PV1000) invested one year ago in Banco do Brasil is R$926, comprising a capital loss of R$109 and dividend reinvested of R$36.

PV10001-week1-month1-year
BBAS3.SA1,1061,067926
Brazil Index 501,0531,0401,054

2.2 Overbought/Bearish/Resistance Signals:

+ The stock is overbought according to the Williams % R indicator of -0.5, suggesting the price is close to its 14-day high of R$30.44.

Low Performance Indicators and rank of Banco do Brasil in the Brazilian market:

DescriptionValueRank In Market
Return on Assets [ROA] %0.9In Bottom 7%
EBITDA Margin %8.8In Bottom Quartile

2.3 Fundamentals:

+ Net profit margin has averaged 7.6% in the last 3 years. This is lower than the sector average of 11.3% and suggests a low margin of safety.

2.4 Overvaluation [compared with sector average]:

+ Return on Assets 0.9% [1.1%].

SECTION 3 BANCO DO BRASIL PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 12,250,000 shares worth R$372.6 million (US$90.2 million) traded today. In the past week, volume was 1.2 times average and the shares were up 10.6%. The rise has been propped up by firm volume of 1.3 times the average daily volume of 9.8 million shares.

+ Banco do Brasil is at a discount of 29.7% to its 12-month high of R$43.26 on March 08. It is also at a premium of 27.6% to the 12-month low of R$23.85 on June 19.

3.2 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 93.9% (or a turnover period of 1 year 22 days). This average length of ownership of the stock at 0.9 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.

3.3 Moving Annual Return (Past 5 years)

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 3 out of 5 years.

SA:BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Sep 2130.421.27(10.9)3.7(7.2)
1 Yr ago34.160.8261.43.965.3
2 Yrs ago21.161.1744.9852.8
3 Yrs ago14.611.88(43.5)7.3(36.3)
4 Yrs ago25.881.6434.58.543.0

Close 5 years ago R$19.25

3.4 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.

3.5 The Past Three Years

+ Banco do Brasil SA (SA:BBAS3), has climbed R$15.81 (or 108.2%) in the past three years to close at R$30.42 today. Compared with the Brazil Index 50 which has risen 64.5% over the same period, this is a relative price increase of 43.7%.

SECTION 4 BANCO DO BRASIL RELATED NEWS

Other News

+ BSS/News Bites:

Banco do Brasil SA is placed 120/266 in BSS News Bites' ranking of Brazilian performers in the past year, a percentile ranking of 55.

+ Vanguard Total World Stock ETF 7587:

The stock was one of 7587 global stocks selected by Vanguard Total World Stock ETF (VT). As at Jul 31, 2018, the Vanguard Total World Stock ETF held 328,593 shares worth $US2,749,655 or 0.02% by value of the ETF's portfolio [Ranked 1051 out of 7587 by value and 7 out of 119 for Brazil].

SECTION 5 BANCO DO BRASIL SUMMARY FINANCIALS

5.1 Dividend History

+ Trailing 12 months dividend has deteriorated from R$1.64 in 2014 to R$1.27 in 2018.

5.2 Financials Summary (Past 3 years)

Year endedDec 2017Dec 2016Dec 2015
Sales (USD B)35.842.954.7
Pretax (USD B)3.92.63
Net (USD B)2.61.73.5
EPS (BRL)3.822.525.05

+ Net profit was up 51.3% from US$1.7 billion in 2016 to US$2.6 billion in 2017.

+ Earnings Per Share (EPS) was up 51.6% from R$2.52 to R$3.82.

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 Issued Capital

Based on 2,865,417,020 issued shares the market capitalisation is R$87.2 billion (US$21.1 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

Business Sector: Banking & Investment Services

Industry Group: Banking Services

Industry: Banks

Economic Sector: Financials

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