Esporte Shareholders Of Banco do Brasil (BVMF:BBAS3) Must Be Happy With Their 106% Total Return
Esporte It might be of some concern to shareholders to see the Banco do Brasil S.A. (BVMF:BBAS3) share price down 10% in the last month. On the bright side the share price is up over the last half decade. However we are not very impressed because the share price is only up 65%, less than the market return of 144%.
View our latest analysis for Banco do Brasil
While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company’s share price and its earnings per share (EPS).
Over half a decade, Banco do Brasil managed to grow its earnings per share at 4.5% a year. This EPS growth is slower than the share price growth of 11% per year, over the same period. This suggests that market participants hold the company in higher regard, these days. That’s not necessarily surprising considering the five-year track record of earnings growth.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
BOVESPA:BBAS3 Earnings Per Share Growth July 11th 2021 This free interactive report on Banco do Brasil’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Banco do Brasil the TSR over the last 5 years was 106%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective Banco do Brasil shareholders are down 0.8% for the year (even including dividends), but the market itself is up 27%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 16% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It’s always interesting to track share price performance over the longer term. But to understand Banco do Brasil better, we need to consider many other factors. Case in point: We’ve spotted 2 warning signs for Banco do Brasil you should be aware of.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BR exchanges.
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