Monday January 18, 2021 18 January 2021

NEWS BITES - BRIC

Banco do Brasil SA (SA:BBAS3), Brazil's 3rd largest Bank by market cap, is currently the 15th lowest price earnings stock in the Bovespa Index of 73 stocks.

The price earnings ratio of 5.6 divided by annual growth in EPS (FY2019 vs FY2018) of 40.7% corresponds to an attractive P/E/G of 0.14 times; being less than the value benchmark of 1.0.

The earnings yield of 17.8% is 2.4 times the 10-year bond yield of 7.5%.

The stock has dropped 75.0 centavos (2.0%) from its previous trading session to close at R$35.92. Compared with the Bovespa Index which fell 462.4 points (0.4%) in the day, the relative price change was -1.7%. Today the stock traded at its three-day high of R$37.03.

Banco do Brasil Stock Dashboard (traded in BRL)

CurrencyUSD 1 = BRL 5.29 Dividend Yield4.1%
Jan 18 closeBRL35.92SectorBank
Ave Daily Volume17,774,960 sharesShares Outstanding2,865,417,020
52-Week Range (In BRL)21.36 - 50.33Market CapBRL102.9 billion [$19.5 billion]
% Held by Top Shareholder50EPS Growth (FY2019 vs FY2018)40.7%
P/E5.6

BDORY ADR Dashboard (traded in $)

Home ExchangeBrazilRatio1 ADR equals 1 ordinary share
CodeBDORYTypeSponsored
ISINUS0595781040Jan 15 close$6.90
CUSIP059578104Ave Daily Volume365,306 ADRs
*No. Held by Institutions662,16452-Week Range (In USD)4.04 - 13.49
% of shares outstanding0.02%

INDEX

SECTION 1 Recent News

SECTION 2 Corporate Profile

SECTION 3 Top shareholders

SECTION 4 Today's Bearish Signals

SECTION 5 Ongoing Bearish Parameters

SECTION 6 Today's Bullish Signals

SECTION 7 Ongoing Bullish Parameters

SECTION 8 News Archives (Feb 2017 - Sep 2020)

SECTION 9 Currency Synopsis: Brazilian Real (BRL)

SECTION 10 Historical Perspective

SECTION 11 Macroeconomic Indicators

SECTION 12 Credit Rating Summary

Glossary

DATA DOWNLOAD CENTER

BBAS3: EXCEL TABLES ARE AVAILABLE TO EXPORT DATA:

+ PRICE VOLUME - 5-YEAR HISTORY

+ PEER COMPARISON - STOCK IN BANK SECTOR AND STOCK IN INDICES

BBAS3: LINKS IN HTML TO FURTHER INFORMATION:

+ NEWS ARCHIVES - BBAS3 PAST 3 YEARS IN HTML:

+ PRICE VOLUME CHARTS IN HTML

+ USD vs BRL EXCHANGE RATE CHARTS IN HTML

SECTION 1 Recent News

1.1 FY 2020

Banco do Brasil tumbles 23% in FY 2020

Banco do Brasil SA (SA:BBAS3), Brazil's 2nd largest Bank by market cap, has tumbled R$11.97 (or 23.5%) in FY 2020 to close at R$39.0 on Wednesday, December 30. Compared with the Bovespa Index which has risen 2.7% in FY 2020, this is a relative price change of -26.2%.

Average daily volume of 17.3 million shares in FY 2020 was 1.7 times the average daily volume in FY 2019.

1.2 Dividends

December 14 2020: Banco do Brasil announces dividend

Banco do Brasil today announced a cash dividend of 11.70 centavos per share. The ex-dividend date is Monday, December 14, 2020 and the record date is Friday, December 11, 2020 and it is payable on Wednesday, December 30.

SECTION 2 Corporate Profile

2.1 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.

2.2 Contact Details

Websitehttp://WWW.BB.COM.BR
Physical AddressSBS Q-4 Bloco 3 Lote 32 Plano Piloto Brasilia, DF 70089-900 Brazil
Phone(21)3808 3715
Fax(21)3808 3466
Emailri@bb.com.br

2.3 Industry & Sector

Classification LevelName of Sector
Business SectorBanking & Investment Services
Industry GroupBanking Services
IndustryBanks
Economic SectorFinancials

SECTION 3 Top shareholders

Top 1 shareholders

Name of the Share Holder% of Capital
Ministerio Da Economia / SECRETARIA DO TESOURO NACIONAL50.0

% held by Top 1 Shareholders 50.0%

SECTION 4 Today's Bearish Signals

4.1 Momentum Down 7.4% Past Week

Banco do Brasil underperformed the Bovespa Index in 3 out of 5 days. The price ranged between a low of R$36.67 on Friday, Jan 15 and a high of R$39.47 on Tuesday, Jan 12.

DayBanco do BrasilClose price [BRL]Price change %Relative change % *Comment
FridayOffers 15th lowest Price Earnings in Bovespa Index, after price drop36.67-2.2-0.7VI*=1.2
ThursdayOffers 6th highest dividend yield in Bovespa Index, after price drop37.48-0.2-1.7VI*=2.03
WednesdayOffers 15th lowest Price Earnings in Bovespa Index, after price drop37.55-4.9-3.2Steepest Fall; VI*=1.98
TuesdayOffers 6th highest dividend yield in Bovespa Index, despite price rise39.471.40.4Week-high of 39.47; Top Rise
MondayOffers 15th lowest Price Earnings in Bovespa Index, after price drop38.94-1.70.4Price rise on beating relative strength

* Relative change is price change of stock with respect to Benchmark Index, Bovespa Index.

[Volume Index (VI); 1 is average]

4.2 Rank in the bottom 12% by Price Performance in the Brazilian market

DescriptionValueRank
1-month Price Change %-8.8In Bottom 12%
1-week Price Change %-7.8In Bottom 4%

4.3 Downtrend

The stock traded at a two-month low of R$35.84 today.

Past Month:

- Falls to Rises: In the past month the number of falls outnumbered rises 11:7 or 1.6:1.

Past Quarter:

The Worst 3 weeks in the past quarter

In the past quarter the steepest fall of 11.1% took place in the week beginning Monday October 26.

Mon-FriChange %Bovespa Index Change %RPC %Vol Ind [1 is avg]
Oct 26-30-11.1-7.2-3.91
Jan 11-15-7.4-2.7-4.71.3
Nov 23-27-0.23.9-4.20.7

Trailing Relative Strength (6 months) at 44 percentile:

- The stock has a 6-month relative strength of 44 in the Brazilian market of 219 stocks and 94 preference stocks which means it has underperformed 56% of the market.

4.4 Other Bearish Signals

- Return on Capital Employed of 4.1% versus sector average of 5.5%.

- Net profit margin has averaged 10.4% in the last 3 years. This is lower than the sector average of 15.9% and suggests a low margin of safety.

SECTION 5 Ongoing Bearish Parameters

5.1 Present Value of R$1000 Invested in the Past Year; The Worst Period with PVR$1000 < 787

PVR$1,0001 yr ago
BBAS3.SAR$786
Bank sectorR$859
Bovespa IndexR$1,029

5.2 Past year: price fall of 24.5%

1-Year price change of -24.5% for Banco do Brasil underperformed the change of 2.9% in the Bovespa Index for a relative price change of -27.3%.

Price Change %Year
Banco do Brasil-24.5
Bank sector-14.1
Bovespa Index2.9

5.3 Moving Annual Return of -21.4% in the past year:

Moving Annual Return was -21.4% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 41.6%

BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Jan 1835.921.47(24.5)3.1(21.4)
1 Yr ago47.562.545.55.611.1
2 Yrs ago45.081.5150.1555.2
3 Yrs ago30.030.9424.53.928.4
4 Yrs ago24.120.91126.28.5134.7

Close 5 years ago R$10.67

5.4 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Period with TSR < -21.3%

TSR %1 yr
BBAS3.SA-21.4

SECTION 6 Today's Bullish Signals

6.1 Rank in the top 20% by Relative Valuation in the Brazilian market

DescriptionValueRank
Price/Earnings5.6In Top 11%
P/E * P/NTA5.34In Top 14%
Price/Earnings/Growth0.14In Top 19%
Dividend Yield %4.1%In Top 20%

6.2 Uptrend

Beta > 1 combined with price rise. The Beta of the stock is 1.4.

Price/Moving Average Price of 1.12 and positive MACD:

- The Price/MAP 200 of 1.12 for Banco do Brasil is higher than the Price/MAP 200 for the Bovespa Index of 1.0.

- The price to 200-day MAP ratio is 1.12, a bullish indicator. In the past 200 days this ratio has exceeded 1.12, 25 times suggesting further upside. The 50-day MAP of R$36.08 is higher than the 200-day MAP of R$32.21, a bullish indicator. The 200-day MAP has increased to R$32.21. An increase is another bullish indicator.

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 37.81 minus the 26-day EMA of 37.59 is positive, suggesting a bullish signal.

6.3 Undervaluation

Price/Earnings:

Banco do Brasil stock is trading at the second lowest P/E multiple in the Bovespa Index.

Earnings Yield of 17.8% > Brazilian ave of 7.9% > Bond Yield of 7.5%:

- Earnings yield of 17.8% is greater than the Brazilian average earning yield of 7.9%.

- The earnings yield of 17.8% is 2.4 times the 10-year bond yield of 7.5%.

(All figures in %)

Earnings Yield17.8
Brazilian avg7.9
Dividend Yield4.1
Bond Yield7.5

Dividend Yield:

Banco do Brasil stock is the sixth highest dividend yielding stock in the Bovespa Index.

Dividend Yield of 4.1% > Index avg of 2.1%:

- The relative yield of the stock, defined by its yield of 4.1%, divided by average yield of dividend yielding stocks in the Bovespa Index of 2.1% is 192.5%. This suggests the stock is undervalued in dividend yield terms.

Brand Value/Enterprise Value:

- Brandirectory have estimated Banco do Brasil brand value at R$52.3 billion ($9.9 billion). The Brand Value represents an impressive 10.2% of the estimated Enterprise Value of R$513.3 billion ($97 billion). Enterprise Value is defined as MCap of R$102.9 billion plus net debt of R$410.4 billion.

6.4 Other Bullish Signals

- Over the last 3 years average annual compound growth rate of earnings per share was 15.4%. This is considered moderate.

- As per the Du Pont analysis, Return on Equity of 16.7% is better than sector average of 16.7%. This is computed as net profit margin of 14.1% times asset turnover [sales/assets] of 0.09 times leverage factor [total assets/shareholders' equity] of 13.5.

6.5 Oversold/Bullish/Support Signals:

- At R$35.92 the price is below the lower Bollinger band support of R$36.36, indicating an upside for it to return to the band.

- The stock is oversold according to the Williams % R indicator of -98.3, suggesting the price is close to its 14-day low of R$35.84.

SECTION 7 Ongoing Bullish Parameters

7.1 Present Value of R$1000 Invested in the Past [3 Mo, 3 Yrs]; The Best Periods with PVR$1000 > 1,207

PVR$1,0003 mo ago3 yrs ago
BBAS3.SAR$1,208R$1,377
Bank sectorR$1,261R$1,000
Bovespa IndexR$1,241R$1,496

7.2 MCap: 5-Year Increase of R$65 billion [$12 billion]

In the past 5 years Market Capitalization has increased by R$65.2 billion (173%) from R$37.7 billion to R$102.9 billion. Based on a dynamic start date of 5 years ago, there have been declines in MCap in 2 out of 5 years.

PriceMCap (BRL B)MCap ($ B)
LastR$35.92102.919.5
1 Year agoR$47.56141.833.9
2 Years agoR$45.08141.538.1
3 Years agoR$30.0398.330.7
4 Years agoR$24.1281.425.5
5 Years agoR$10.6737.79.3

7.3 EPS growth [FY2019 vs FY2018] of 40.7%:

FYEPS (R$)Growth %
20196.3940.7
20184.5416.1

7.4 Annualised Period-based Total Shareholder Returns [TSR %]: The Best Periods with TSR > 9.3%

TSR %3 yrs5 yrs10 yrs
BBAS3.SA11.133.59.4

7.5 P/E/G < 1

The price earnings ratio of 5.6 divided by trailing twelve months eps growth of 40.8% corresponds to an attractive P/E/G of 0.1 times; being less than the value benchmark of 1.0.

EPS Growth (%)40.75
P/E/G0.14
P/E5.62

7.6 Increased Volume, up 99% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has increased 99.1% to 17.8 million shares.

Avg. Daily Volume Traded 12 months ended Jan 18, million shares

YearADVT
202117.8
202010.4
201911.4
20187.5
20178.9

7.7 Increased VWAP, up 89% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has increased by 88.7% to R$32.86. .

Past five years, 12 months ended Jan 18 (BRL)

YearHigh PriceVWAPLow Price
202150.3332.8621.36
202052.1846.1840.91
201945.632.1821.5
201832.827.3721.45
201725.0317.4110.16

7.8 Increased share turnover, up 270% in 5 years

In the past five years, average daily share turnover has increased 269.6% to R$574.6 million ($108.6 million). This suggests increased liquidity.

Past five years, 12 months ended Jan 18 (BRL million)

YearAverage Daily Turnover
2021574.6
2020475.6
2019357.9
2018200.9
2017155.5

7.9 Satisfies one criteria of Benjamin Graham

- The P/E of 5.6 multiplied by the P/NTA of 0.9 is 5.3. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

7.10 Satisfies 5 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Positive net income.

- Positive operating cashflow.

- Return on Assets improvement [from 0.9% to 1.2%].

- Good quality of earnings [operating cashflow exceeds net income].

- Improvement in gross margin [from 23.6% to 25.2%].

SECTION 8 News Archives (Feb 2017 - Sep 2020)

HTML PAGES ARE AVAILABLE TO EXPORT AS FOLLOWS:

http://www.buysellsignals.net/BuySellSignals/report/Brazil/Stock/Daily/Html/BBAS3_Corporate_Wire.html

SECTION 9 Currency Synopsis: Brazilian Real (BRL)

9.1 % Change of USD vs Currency Basket Period-Based

In the past year the US Dollar rose 26.7% against the Brazilian Real; in the past three years the US Dollar rose 65.3% against the Brazilian Real.

LastCountry1-day %1-week %1-Year %3-Yrs %
USD1=5.3BRLBrazil2.0-2.326.765.3
USD1=6.481CNYChina0.10.1-5.90.4
USD1=1.298AUDAustralia0.90.7-10.42.7
USD1=1.33SGDSingapore0.40.4-1.20.5
USD1=0.736GBPUnited Kingdom0.8-0.2-4.11.1
USD1=1.401NZDNew Zealand1.11.4-7.41.6
USD1=0.891CHFSwitzerland0.40.7-7.5-7.9
USD1=8.397SEKSweden1.02.1-11.24.3
USD1=0.828EUREuropean Union0.61.2-7.71.0
USD1=7.753HKDHong Kong---0.2-0.9
USD1=1,103.69KRWSouth Korea0.51.0-4.74.4
USD1=1.273CADCanada0.70.3-2.42.2
USD1=1.0USDUnited States Of America0.0---
USD1=19.806MXNMexico0.4-0.95.34.0
USD1=103.877JPYJapan0.1-0.1-5.5-6.4
USD1=8.57NOKNorway1.11.7-3.38.2

9.2 % Change of BRL vs Currency Basket Period-Based

In the past year the Brazilian Real fell 21.8% against the Hong Kong Dollar; in the past three years the Brazilian Real fell 39.7% against the Hong Kong Dollar.

LastCountry1-day %1-week %1-Year %3-Yrs %
BRL1=1.472HKDHong Kong-1.32.4-21.8-39.7
BRL1=209.241KRWSouth Korea-0.93.3-25.3-36.6
BRL1=0.241CADCanada-0.72.8-22.5-37.9
BRL1=0.19USDUnited States Of America-1.42.5-20.6-39.2
BRL1=3.764MXNMexico-0.81.7-17.3-36.5
BRL1=1.23CNYChina-1.32.5-25.5-39.0
BRL1=19.718JPYJapan-1.32.4-25.1-43.1
BRL1=1.619NOKNorway-0.74.0-23.7-34.5
BRL1=0.246AUDAustralia-0.53.2-28.9-37.6
BRL1=0.252SGDSingapore-1.02.9-22.6-39.0
BRL1=0.14GBPUnited Kingdom-0.72.4-24.1-38.6
BRL1=0.266NZDNew Zealand-0.43.9-27.5-38.3
BRL1=0.169CHFSwitzerland-1.22.9-26.9-44.1
BRL1=0.157EUREuropean Union-0.93.7-27.0-38.6
BRL1=1.59SEKSweden-0.64.6-30.6-36.7

SECTION 10 Historical Perspective

Year-on-Year Comparison USD/BRL (Trailing year - ended 15 Jan)

In the past 5 years, the USD/BRL has jumped 30.9% from 4.05 to 5.3, an average compound annual appreciation of the USD by 5.5%.

202120202019201820172016
Close5.34.183.723.223.224.05
% Change26.712.515.6-0.1-20.571.2
Range3.13 - 4.173.86 - 4.06

USD1 buys BRL 5.3 today: Appreciation of USD from 0.97 v/s BRL twenty five years ago

Last5 Yrs ago10 Yrs ago15 Yrs ago20 Yrs ago25 Yrs ago
USD/BRL5.34.011.722.271.950.97

Present Value of R$1000 Invested in USD 20 years ago is R$2,714

PVR$1,0005 yrs ago10 yrs ago20 yrs ago
USD/BRLR$1,322R$3,089R$2,714

SECTION 11 Macroeconomic Indicators

INDICATORUNITED STATES[USD]BRAZIL[BRL]
GDP (Billion USD)21,4281,840
GDP growth yoy (%)-2.8-3.9
Interest rate (%)0.252.0
Inflation rate (%)1.24.31
Unemployment rate (%)6.714.3
Budget / (Deficit) to GDP ratio (%)(4.6)(5.9)
Current account / (Deficit) to GDP ratio (%)(2.3)(2.7)
Debt to GDP ratio (%)106.975.79

SECTION 12 Credit Rating Summary

Brazil:

Rating AgencyLong TermForeign CurrencyDescription
Moody'sBa2
FitchBB
S&PBB-Considered highest speculative grade by market participants. The minus (-) sign shows relative standing within the major rating category.
FITCHBBBGood credit quality: 'BBB' ratings indicate that expectations of default risk are currently low.
DAGONGBBB+Medium Credit Quality: "BBB" ratings indicate that expectations of default risk are currently low and it has BBB medium default risk. In normal conditions, the capacity for payment of financial commitments is considered adequate, whereas under adverse business or economic conditions risks of default are more likely to exist under this scale. The plus (+) sign shows relative standing within the major rating category.

Glossary

ADVT: Average Daily Volume of shares Traded

Annual Return: Dividends Paid In a 12-Month Period/Price at the Beginning of the Period + Capital Gain or Loss over 1 Year/Price 1 Year Ago (%)

Dividend Yield: Dividend Per Share/Share Price (%)

Earnings Yield: Earnings Per Share/Share Price (%)

Income during the n years (3/2/1): Dividends received during the Period

Moving Average Price (n periods): Sum of Prices for each Period/Number of Periods

PV1000: Present value of 1000 invested 1 year/'n' years ago

Price Close/Moving Avg Price: Latest Price/Moving Average Price

Price/Earnings: Share Price/Earnings Per Share (times)

Relative Price Change [RPC]: Relative price change is price change of stock with respect to Benchmark Index

Relative Strength (6 Months): Price close today/Price close 6 months ago, then ranked by percentile within the entire market.

Return on Assets: Net Profit/Total Assets (%)

Return on Equity (Shareholders' Funds): Net Profit/Net Assets (%)

TSR: Total Shareholder Returns is expressed as an annualized rate of return for shareholders after allowing for capital appreciation and dividend

Volume Weighted Average Price (VWAP): The Volume Weighted Average Price (VWAP) is the summation of turnover divided by total volume in the same period.

Created by www.buysellsignals.com