Surging Uphill – Banco Bradesco Sa (BBD) Defies Analysts' Skepticism with a 3.5% Move

Banco Bradesco Sa may be undervalued with poor growth indicators, but the 7 analysts following the company give it an rating of hold. Their target prices range from $2.6 to $5.1 per share, for an average of $3.76. At today's price of $3.59, Banco Bradesco Sa is trading -4.52% away from its average target price, suggesting there is an analyst consensus of some upside potential for the stock.

Banco Bradesco S.A., together with its subsidiaries, provides various banking products and services to individuals, corporates, and businesses in Brazil and internationally. Based in Osasco, Brazil, the large-cap Finance company has 73,855 full time employees. Banco Bradesco Sa has offered a 18.1% dividend yield over the last 12 months.

Banco Bradesco Sa has a trailing twelve month P/E ratio of 10.6, compared to an average of 14.34 for the Finance sector. Considering its EPS guidance of $0.51, the company has a forward P/E ratio of 7.0.

The average compound growth rate of the company's historical and projected earnings per share is -22.9%. On this basis, the company's PEG ratio is -0.43, which indicates that its shares are overpriced.

On the other hand, the market is potentially undervaluing Banco Bradesco Sa in terms of its book value because its P/B ratio is 0.24. In comparison, the sector average P/B ratio is 1.57. The company's shares are currently -83.7% below their Graham number, indicating that its shares have a margin of safety.

So why does Banco Bradesco Sa get a bad rating from most analysts despite its seemingly attractive valuation? One reason could be its worrying EPS growth rate of -34.7%.

2019-12-31 2020-12-31 2021-12-31 2022-12-31
Revenue (MM) $99,281 $82,369 $102,429 $109,001
Interest Income (MM) $65,800 $71,168 $83,102 $69,302
Net Margins 21.18% 19.23% 22.62% 19.25%
Net Income (MM) $21,023 $15,837 $23,172 $20,984
Depreciation & Amort. (MM) -$5,866 -$5,921 -$5,773 -$5,663
Earnings Per Share $1.87 $1.41 $2.07 $0.34
EPS Growth n/a -24.6% 46.81% -83.57%
Diluted Shares (MM) 10,692 10,692 10,672 10,626
Free Cash Flow (MM) -$24,779 $138,168 -$106,405 $32,354
Capital Expenditures (MM) -$5,326 -$4,265 -$4,410 -$9,412
Long Term Debt (MM) $235,473 $212,820 $234,280 $344,630
Net Debt / EBITDA 1.06 1.13 0.91 2.08
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