Brazil is bursting onto the world’s stage as the commodities rich South American nation rapidly grows its middle class. Banco Bradesco S.A. (BBD), one of Brazil’s largest private banks, is cashing in on the growth as it grew its loan portfolio by double digits in the last year.
Banco Bradesco has its hands in all areas of the Brazilian economy by offering banking and financial services to both individuals and all different sized companies, from the little guys to the global conglomerates.
It issues credit cards, sells insurance, handles pension plans, provides asset management and brokerage services as well as providing lending and the taking of deposits.
The bank has 6,374 branches, PAB mini-branches and PAAs throughout the country and customers can also use several other banking networks as well as the 6,194 Banco Postal branches.
Banco Bradesco Surprised on the Zacks Consensus Estimate for the Second Straight Quarter
On Oct 27, Banco Bradesco reported its earnings for the third quarter and the first nine months of 2010.
Earnings per share in the quarter were 39 cents which surprised on the Zacks Consensus by a penny. It has a pretty good track record of beating, having done so 3 out of the last 4 quarters.
Total assets under management rose 24.3% from September 2009 to R$838.46 billion.
More impressively, the total loan portfolio surged 18.6% to R$255.62 billion from the year before period. Loans to individuals jumped 23% while loans to companies climbed 16.2% to R$162.713 billion.
Given strong economic conditions in Brazil, Reuters is reporting that the company expects double digit loan growth to continue into next year.
Zacks Consensus Estimates Jump on the Earnings News
Analysts are already responding to the strong earnings report as 3 estimates have moved higher for 2010 in the last week.
The 2010 Zacks Consensus is up 3 cents to $1.42 per share during that time. That is earnings growth of 23.5%.
The double digit earnings growth is expected to continue into 2011. 3 out of 7 estimates have also risen for 2011, pushing up the 2011 Zacks Consensus to $1.66 from $1.58 per share in the last week. This is earnings growth of 17.3%.
Banco Bradesco is a Value Stock
Although the company is trading right at 2-year highs, shares still have some value.
It is trading at 14.8x forward earnings which is just on the cusp of “value” (as I look at stocks under 15x.)
The company has a price-to-book ratio of 1.6, which is in the value parameters as well.
It has a solid return on equity (ROE) of 22%, easily beating its peers at 14.7%. In addition, it also rewards shareholders with a dividend currently yielding 0.5%.
Banco Bradesco is a Zacks #1 Rank (strong buy) stock.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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