Banco do Brasil (BBAS3:R$33.50) offers 9th highest dividend yield 03 July 2020

NEWS BITES - BRIC

Dateline: Friday July 03, 2020

Banco do Brasil SA (SA:BBAS3), Brazil's largest Bank by market cap, is currently the 9th highest dividend yielding stock in the Bovespa Index .

Stock Summary (traded in BRL)

Currency1 USD = 5.36 BRLDividend Yield5.5%
Jul 03 closeR$33.50SectorBank
Ave Daily Volume15,572,000 sharesShares Outstanding2,865,417,020
52-Week Range21.91 - 53.53Market CapR$96 billion [USD17.9 billion]
P/E7.2EPS Growth (FY2018 vs FY2017)16.1%

ADR Summary (traded in USD)

Home ExchangeBrazilRatio1 ADR equals 1 ordinary share
CodeBDORYTypeSponsored
ISINUS0595781040Jul 02 closeUSD6.27
CUSIP059578104Ave Daily Volume341,519 ADRs
*No. Held by Institutions821,13252-Week Range4.13 - 14.20
% of shares outstanding0.03%

Click on links to download BBAS3 data

Financials in xls

News Archives Past 4 years in HTML

INDEX

SECTION 1 Corporate Profile

SECTION 2 Today's Bullish Signals

SECTION 3 Ongoing Bullish Parameters

SECTION 4 Today's Bearish Signals

SECTION 5 Ongoing Bearish Parameters

SECTION 6 Bank Metrics

Click here to view the following

SECTION 7 Dividend

SECTION 8 News Archives (Aug 2018 - Mar 2020)

Glossary

SECTION 1 Corporate Profile

1.1 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.

1.2 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

1.3 Industry & Sector

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

SECTION 2 Today's Bullish Signals

2.1 Momentum Up 0.5% Past Week

Banco do Brasil outperformed the Bovespa Index in 3 out of 5 days. The price ranged between a low of 31.82 on Friday, Jun 26 and a high of 33.44 on Monday, Jun 29.

DayBanco do BrasilClose price [BRL]Price change %Relative change %Comment
ThursdayUp 3.1% in 2 days33.160.30.2VI*=1.3
WednesdayOffers 10th highest dividend yield33.072.91.4Price/MAP50 above 1
TuesdayIn bottom 3% performers of Bovespa Index32.15-3.9-3.2Steepest Fall; VI*=1.6
MondayOffers 10th highest dividend yield33.445.12.9Week-high of 33.44 Top Rise; VI*=1.2
FridayLoses R$3 billion (US$636 million) in MCap, steepest heavyweight fall in Bank sector31.82-3.6-1.2Week-low of 31.82

[Volume Index (VI); 1 is average]

2.2 Rank in the top 22% by Relative Valuation in the Brazilian market

DescriptionValueRank
EV/EBITDA24.7In Top 6%
Dividend Yield %5.5%In Top 16%
Price/Earnings7.2In Top 20%
P/E * P/NTA7.25In Top 22%

2.3 Rank in the top 22% by Price Performance in the Brazilian market

DescriptionValueRank
1-week Price Change %5.3In Top 22%

2.4 Uptrend

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

Positive MACD:

- The Moving Average Convergence Divergence (MACD) indicator of 12-day Exponential Moving Average (EMA) of 33.11 minus the 26-day EMA of 32.68 is positive, suggesting a bullish signal. Both the 12-day EMA as well as the 26-day EMA are rising, another bullish signal.

Past Quarter:

- The shares had their best quarter in six quarters since the quarter ended January 03, 2019.

2.5 Undervaluation

Price/Earnings:

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

Dividend Yield:

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

Dividend Yield > 2/3rd Bond Yield:

The dividend yield of 5.47% is 0.83 times the triple-A bond yield of 6.6%; it is also above the benchmark of 2/3rd set by Benjamin Graham.

(All figures in %)

Dividend Yield5.47
Bond Yield6.6
Spread1.13

Dividend Yield of 5.5% > Index avg of 3.2%:

- The relative yield of the stock, defined by its yield of 5.5%, divided by average yield of dividend yielding stocks in the Bovespa Index of 3.2% is 170.9%. This suggests the stock is undervalued in dividend yield terms.

Brand Value/Enterprise Value:

- Brandirectory have estimated Banco do Brasil brand value at R$53 billion (US$9.9 billion). The Brand Value represents an impressive 10.4% of the estimated Enterprise Value of R$510.5 billion (US$95.2 billion). Enterprise Value is defined as MCap of R$96 billion plus net debt of R$414.5 billion.

2.6 Other Bullish Signals

- Return on Capital Employed of 5.5% versus sector average of 3.4% and market average of 2.2%.

SECTION 3 Ongoing Bullish Parameters

3.1 Annualised Period-based Total Shareholder Returns [TSR %]: The Best Periods with TSR > 10.9%

TSR %3 yrs5 yrs10 yrs
BBAS3.SA17.217.711

3.2 Present Value of R$1000 Invested in the Past [3 Mo, 3 Yrs]; The Best Periods with PVR$1000 > 1,313

PVR$1,0003 mo ago3 yrs ago
BBAS3.SAR$1,314R$1,619
Bank sectorR$1,191R$1,054
Bovespa IndexR$1,397R$1,529

3.3 MCap: 5-Year Increase of R$28 billion [USD5 billion]

In the past 5 years Market Capitalization has increased by R$27.6 billion (40%) from R$68.4 billion to R$96 billion. Based on a dynamic start date of 5 years ago, there have been declines in MCap in 3 out of 5 years.

PriceMCap (BRL B)MCap (US$ B)
LastR$33.509617.9
1 Year agoR$51.9815540.3
2 Years agoR$26.8584.221.7
3 Years agoR$23.6376.823.2
4 Years agoR$14.5948.915.1
5 Years agoR$19.0768.422

3.4 EPS growth [FY2018 vs FY2017] of 16.1%:

There have been four rises and one decline in the past 5 years. Average Annual Compounded rate of growth in EPS for the 5 years was 8.8%.

FYEPS (R$)Growth %
20184.5416.1
20173.9155.2
20162.52-50.1
20155.0519.4
20144.2342.2

3.5 Improved EBIT Margins:

EBIT margin is positive and has increased from 12.7% to 15.4% in the past year.

FYEBIT Margins (%)
201815.4
201712.7
20166.5
20156.8
201411.3

3.6 Increased Volume, up 80% in 5 years

In the past five years, Average Daily Volume of Trading (ADVT) has increased 80.0% to 15.6 million shares.

Avg. Daily Volume Traded 12 months ended Jul 03, million shares

YearADVT
202015.6
201911.2
20189.1
20177.4
20168.7

3.7 Increased VWAP, up 157% in 5 years

In the past five years Volume Weighted Average Price (VWAP) has increased by 157.4% to R$38.27. .

Past five years, 12 months ended Jul 03 (BRL)

YearHigh PriceVWAPLow Price
202053.5338.2721.91
201952.5439.9524.75
201840.0130.422.06
201730.923.4614.16
201619.8614.8710.42

3.8 Increased share turnover, up 353% in 5 years

In the past five years, average daily share turnover has increased 352.7% to R$566.2 million (US$105.6 million). This suggests increased liquidity.

Past five years, 12 months ended Jul 03 (BRL million)

YearAverage Daily Turnover
2020566.2
2019436.9
2018273.1
2017171.1
2016125.1

3.9 Satisfies one criteria of Benjamin Graham

- The P/E of 7.2 multiplied by the P/NTA of 1 is 7.2. Being less than the Benjamin Graham benchmark of 22.5 the stock appears undervalued.

SECTION 4 Today's Bearish Signals

4.1 Momentum Down 3.6% Past Month

In the past quarter the steepest fall of 18.1% took place in the week beginning Monday April 20. The fall was exacerbated by volume of 2.5 times average.

The Worst 3 weeks in the past quarter:

Mon-FriChange %Bovespa Index Change %RPC %Vol Ind [1 is avg]
Apr 20-24-18.1-4.6-13.52.5
Mar 30-Apr 03-9.7-5.5-4.21.5
Jun 22-26-6.5-2.9-3.61.1

4.2 Rank in the bottom 18% by Price Performance in the Brazilian market

DescriptionValueRank
1-month Price Change %-3.6In Bottom 18%
Price/MAP2000.83In Bottom 17%

4.3 Downtrend

Price/Moving Average Price of 0.83:

- The price to 200-day MAP ratio is 0.83, a bearish indicator. In the past 200 days this ratio has been under 0.83, 70 times suggesting further downside. The 50-day MAP of R$30.69 is lower than the 200-day MAP of R$40.32, another bearish indicator.

Trailing Relative Strength (6 months) at 16 percentile:

- The stock has a 6-month relative strength of 16 in the Brazilian market of 219 stocks and 90 preference stocks indicating it is trailing 84% of the market.

4.4 Overvaluation

Price/Earnings of 7.2 > sector avg of 4.9:

- Price/Earnings of 7.2 versus sector average of 4.9.

4.5 Other Bearish Signals

- Return on Equity of 12.6% versus sector average of 16.0%.

- Net profit margin has averaged 7.5% in the last 3 years. This is lower than the sector average of 12.8% and suggests a low margin of safety.

- As per the Du Pont analysis, Return on Equity of 12.6% is lower than sector average of 16.0%. This is computed as net profit margin of 9.6% times asset turnover [sales/assets] of 0.09 times leverage factor [total assets/shareholders' equity] of 13.9.

SECTION 5 Ongoing Bearish Parameters

5.1 Annualised Period-based Total Shareholder Returns [TSR %]: The Worst Period with TSR < -32.8%

TSR %1 yr
BBAS3.SA-32.9

5.2 Present Value of R$1000 Invested in the Past Year; The Worst Period with PVR$1000 < 673

PVR$1,0001 yr ago
BBAS3.SAR$672
Bank sectorR$693
Bovespa IndexR$948

5.3 Past year: price fall of 35.5%

1-Year price change of -35.5% for Banco do Brasil underperformed the change of -3.8% in the Bovespa Index for a relative price change of -31.7%.

Price Change %Year
Banco do Brasil-35.5
Bank sector-30.7
Bovespa Index-3.8

5.4 Moving Annual Return of -32.0% in the past year:

Moving Annual Return was -32.0% in the past year. Based on a dynamic start date of 5 years ago, the real rate of return has averaged 27.7%

BBAS3Close (BRL)Dividends (BRL)Capital Gain / (Loss) %% YieldAnnual Return %
Jul 0333.51.83(35.5)3.5(32.0)
1 Yr ago51.982.2293.68.3101.8
2 Yrs ago26.851.213.65.118.7
3 Yrs ago23.630.81625.567.5
4 Yrs ago14.591.18(23.5)6.2(17.3)

Close 5 years ago R$19.07

5.5 Satisfies 1 out of 9 criteria of Joseph Piotroski [pass mark 5]:

- Return on Assets improvement [from 0.8% to 0.9%].

SECTION 6 Bank Metrics

6.1 Bank Metrics (FY2018)

DescriptionR$ B FY2018R$ B FY2017]Change
Bank Revenue134.5 142.4 Down 5.6%

Unfavourable Changes:

- Bank Revenue down 5.6% from R$142.4b to R$134.5b

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 (%)

EBIT Margin : Earnings Before Interest and Tax/Revenue (%)

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.

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