BBD
Banco Bradesco S.A.
$3.47
Banks, Insurers & Asset Managers
90%
P/Tangible Book × ROE Quality
Strong
·
Conviction
Undervalued
Trading 63.2% below fair value
You pay
$3.47
Bear
$8.32
Fair
$9.43
Bull
$9.43
Bear
$8.32
+139.7%
ROTCE 11.4% → 3.53x TBV
Fair
$9.43
+171.8%
ROTCE 15.2% → 4.00x TBV
Bull
$9.43
+171.8%
ROTCE 17.5% → 4.00x TBV
Key Value Driver
ROTCE (15.2%) vs. cost of equity (6.1%)
Implied Market Multiple
1.21x
Summary
Our base-case estimate uses P/Tangible Book × ROE Quality. We then blend that result with the average analyst price target of $3.20 from 15 analysts, using a 25% weight on analyst consensus. That produces an estimated intrinsic value of $9.43 per share.
Warnings
Traditional cash flow models don't work well for banks — lending activity distorts how much cash the business actually generates.
Common valuation shortcuts don't apply here — for banks, interest payments are a core business cost, not overhead.
Dividend-based valuation: $8.60 (25% below our primary estimate). Large gaps suggest the dividend may not fully reflect the company's value.
Wall Street's average price target is $3.20 (from 15 analysts). Our estimate is 260% above the consensus -- consider that gap carefully.
Financial statements were converted from BRL into USD using USDBRL at 0.1993 USD per BRL.
Key Risks
- Book value quality matters as much as level — check loan loss reserves
- Interest rate sensitivity creates non-linear earnings surprises
- Insurance reserving is actuarial, not financial — errors emerge slowly