One of the standouts of today's morning trading session has been Banco Bilbao Vizcaya Argentaria, which logged a -1.2% drop and underperformed the S&P 500 by -1.0%. The Commercial Banking stock is now trading at $15.23 per share and is -14.76% below its average target price of $17.87. Analysts have set target prices ranging from $17.0 to 18.7448 dollars per share, and have given the stock an average rating of buy.
The market seems to share this rosy outlook, since Banco Bilbao Vizcaya Argentaria has a short interest of only 0.1%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One measure of the market sentiment regarding a stock is its rate of institutional ownership, which in the case of Banco Bilbao Vizcaya Argentaria stands at 3.5%. This indicates a lower than average rate of institutional ownership -- but what does that have to do with sentiment regarding the stock?
The reason we look at institutional ownership is that institutions such as hedge funds, pension funds, and mutual funds have vast research capabilities. They are often close to management, speaking to them one-on-one and gaining an understanding of the opportunities and challenges they face. Thus, if an institution is willing to place their capital in a company, it's likely that their due diligence has shown it is a safe bet.
To sum up, Banco Bilbao Vizcaya Argentaria is probably the subject of mixed market sentiment because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about BBVA:
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The stock has trailing 12 month earnings per share (EPS) of $2.07
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Banco Bilbao Vizcaya Argentaria has a trailing 12 month Price to Earnings (P/E) ratio of 7.4 compared to the S&P 500 average of 29.3
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The company has a Price to Book (P/B) ratio of 1.59 in contrast to the S&P 500's average ratio of 4.74
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Banco Bilbao Vizcaya Argentaria is a Finance company, and the sector average P/E and P/B ratios are 15.92 and 1.78 respectively
