Which company offers more value? Banco Bradesco Sa (BBD) or Itau Unibanco Banco Holding SA (ITUB)

The shares of Banco Bradesco Sa (NYSE:BBD) and Itau Unibanco Banco Holding SA (NYSE:ITUB) were among the active stocks of the last trading sessions. Banco Bradesco Sa (NYSE:BBD) declined to -0.83% closing at the price of $8.38 whereas the shares of Itau Unibanco Banco Holding SA (NYSE:ITUB) declined -1.73% with the decrease of -0.22 points closing at the price of $12.52. Banco Bradesco Sa has currently decrease -14.13% in its stock over the period of 6-months while its rival Itau Unibanco Banco Holding SA subtracted -13.58% in the previous 6-months.

Now we have to analyze the facts that if the stocks were worthy off investors’ money? The facts to analyze here are risks, profitability, returns and price trends.

Returns and Profitability

Profitability and returns are the main reason of investment, the investors are looking for profits that they get and return they should expect over the period of time.

The first and foremost return that is considered while making an investment is the ROI or Return on Investment. The ROI is the ratio between the profit against the cost of investment. Currently the ROI of Banco Bradesco Sa (NYSE:BBD) is 0% while the ROI of Itau Unibanco Banco Holding SA (NYSE:ITUB) is 6.2%. Another figure that is to be considered while analyzing the profitability of a share is its EBITDA margin, BBD’s EBITDA Margin is NOT AVAILABLE whereas ITUB’s is NOT AVAILABLE.

Both the profitability ratios suggest a mixed sentiment for Banco Bradesco Sa (NYSE:BBD) and Itau Unibanco Banco Holding SA (NYSE:ITUB).

EPS & Surprise Factor

Banco Bradesco Sa (NYSE:BBD) reported $0.21/share EPS for the previous quarter where analysts were predicting an EPS to be $0.2/share Thus beating the analyst Estimates with a Surprise Factor of 5 Percent. While, Itau Unibanco Banco Holding SA (NYSE:ITUB) reported EPS of $0.27/share in the last quarter. The analysts projected EPS of $0.28/share depicting a Surprise of -3.6 Percent.

Taking a look at Earnings per Share, Banco Bradesco Sa tends to be beating the analyst estimates more than Itau Unibanco Banco Holding SA. so BBD is more profitable than ITUB.

Technical Analysis of Banco Bradesco Sa & Itau Unibanco Banco Holding SA

Moving average convergence divergence (MACD) shows that Banco Bradesco Sa (NYSE:BBD) is on a PRICE RELATIVITY trend While Itau Unibanco Banco Holding SA (NYSE:ITUB) is on PRICE RELATIVITY trend. The trend for the past 10-days shows that the Banco Bradesco Sa was in BULLISH territory and Itau Unibanco Banco Holding SA was in BULLISH territory.

BBD’s current statistics gauge that the stock candle is BEARISH with HIGH volatility. While ITUB’s candle is BEARISH with HIGH.

EPS Growth Rate: BBD’s 20.3% versus ITUB’s 11.8%

Another shareholder value can be analyzed through the EPS growth rate; the next 5 years EPS growth rate is predicted by the analysts after the analyzing the previous trends. The next 5 year EPS growth rate of Banco Bradesco Sa (NYSE:BBD) is predicted at 20.3% while Itau Unibanco Banco Holding SA (NYSE:ITUB) stands at 11.8%. These numbers suggest that BBD is more suitable investment in terms of EPS growth rate.

Financial Risk and Liquidity Concerns

The current ratio and the debt ratio are the two ratios that show the investor how quickly the company is able to payout its debt and how quickly it can cover its obligations. The current ratio of BBD stands at 0 while ITUB is at 0 whereas the debt ratio of the prior is 0 while the debt ratio of the later is 4.26.

The values of the both ratios suggest that ITUB is more suitable investment when the liquidity and risk is the main concern.

Analyst Recommendations

While making an investment, another main factor to consider before investing is the analyst recommendation on the scale of 1 to 5 where 1 is strong buy, 2 is buy, 3 is hold, 4 is Sell and 5 is strong sell. Analyst recommend 2.3 for BBD and 2.7 for ITUB which means BBD has Hold rating whereas ITUB has Hold rating.

Another recommendation of analyst that is to be considered worthy is the price target. The mare price or price trend does not suggest the suitability of a stock. The price target set by analyst is also to be considered while investing as it suggests to what extent the stock will rise or fall in the near future. The price target set for BBD is $9.57 which is 12.43% of its current price while ITUB has price target of 13.2 which is 5.15% of its current price.

Valuation Ratios

Valuation is the process of determining the company’s worth for an investor, the valuation ratios give an insight to that worthiness.

BBD currently has price to earning P/E ratio of 13.6 whereas ITUB has 13.39 while the forward P/E ratio for the prior stands at 9.74 and for the later it depicts the value of 10.57.

The price to Book P/B for BBD is 1.89, Price to Sale is at 3.66 and for ITUB these ratios stand at 2.49 and 2.2.