Valuation Scorecard: Stock Rating A-Highest (3/26/24)-Banco Santander Brasil SA (BSBR).

At the current price of $6, what is the market’s view of Banco Santander Brasil SA’s future operating performance? Banco Santander Brasil SA’s common shares will need to reach $9 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $11 Banco Santander Brasil SA stock price by 2029.

Executive Summary

• Banco Santander Brasil SA’s important characteristics: high expected growth, high stability, low profitability, and low financial strength. A big positive influence on Banco Santander Brasil SA’s valuation is its superior Growth.
• Average valuation, average shareholder returns. Current valuation levels are average relative to the Banco Santander Brasil SA Peer Group. Recent market returns have tracked the Banco Santander Brasil SA Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Banco Santander Brasil SA shares should reach a level of $53 by 2029 — an 49.3% per year total shareholder return. A 2029 stock price of $9 would reflect median performance and a price of $11 would be required to reach upper quartile performance.
• Growth has been Banco Santander Brasil SA’s biggest valuation strength. Historical growth has been very high relative to the Banco Santander Brasil SA Peer Group and forecasted growth is relatively very high. Revenue Growth, Equity Growth, and Asset Growth have been superior. EPS Growth has lagged. Banco Santander Brasil SA’s historical income statement growth and balance sheet growth have diverged. Revenue growth has exceeded asset growth; earnings growth has fallen short of equity growth driving erosion in return on equity. Banco Santander Brasil SA’s consensus growth expectations are lower than historical growth.
• Profitability is only average. The company has very high excess cash and will have to work to reinvest at attractive returns to support profitability and valuation.
• Banco Santander Brasil SA’s risk profile is neutral. Overall variability has been above average with above average revenue variability, very low E.P.S. variability, and relatively low stock price volatility. Financial Strength is below average and earnings’ expectations are very low. The debt/capital ratio has risen.

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