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Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Bank of China.

Our Excess Returns analysis suggests Bank of China is undervalued by 53.8%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

The price-to-earnings (PE) ratio is a favored valuation tool when assessing profitable companies like Bank of China, because it directly relates a company’s market price to its earnings power. A lower PE can signal that a stock is undervalued relative to its profitability, while a higher PE suggests higher market expectations for future growth or increased risk.

Growth outlooks and risk perception both play a role in what is considered a standard or “fair” PE. Companies with higher, more reliable growth tend to warrant higher PEs, while firms in riskier or slower-growing environments usually see lower multiples. Currently, Bank of China trades at a PE of 5.79x. This is below both the peer average of 6.66x and the banking industry average of 6.00x, indicating that the market prices the company more conservatively than many of its rivals.

Simply Wall St’s proprietary “Fair Ratio” refines the idea of appropriate valuation. The Fair Ratio for Bank of China stands at 6.71x, factoring in the company’s unique growth, risks, profit margins, and scale. This serves as a more holistic gauge than simple peer or industry comparison, as it accounts for detailed company-specific financials as well as broader sector dynamics.

Compared to its Fair Ratio, Bank of China’s current PE is just 0.92x lower. This places it very close to what would be considered fairly valued based on the company’s fundamentals and future prospects.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is simply your own story or viewpoint about a company, connecting your beliefs about its future growth, profitability, and risks to a clear financial forecast and a fair value estimate. Narratives link the numbers to real-world drivers by allowing you to explain why you think Bank of China’s value will move in a certain direction and compare that story to other investors’ perspectives.

Available right on Simply Wall St’s Community page and trusted by millions of investors, Narratives are quick and easy to use. You can write your case for why Bank of China’s digital innovation, international reach, or economic risks will impact its future, then instantly see how your fair value stacks up against the market price and other users’ forecasts. When new earnings or news are released, Narratives update automatically, keeping your story relevant and actionable. For example, some investors see Bank of China’s urbanization push and digital payments strategy unlocking long-term value, leading to price targets as high as HK$5.90. Others remain cautious about risks like low interest rates and assign a price as low as HK$2.79, highlighting how Narratives can clarify decisions about buying or selling at any time.

Do you think there’s more to the story for Bank of China? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include 3988.HK.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com

Narratives offer a smarter way to invest by connecting a company’s story with real forecasts and a fair value. A Narrative reveals the reasoning behind the numbers, combining your perspective on revenue, earnings, and margins with dynamic updates as news emerges. On Simply Wall St’s Community page, millions of investors use Narratives to judge when to buy or sell by comparing Fair Value to the current Price. Narratives flex and evolve, so your investment decisions stay informed and up-to-date.

Explore the original Narrative for Bank Polska Kasa Opieki to keep pace with every development, and see why it pays to follow along:

• Get instant access to up-to-date, analyst-backed forecasts on profits, margins, and fair value. This helps you decide if current prices stack up to expectations.

• Understand the real business drivers, from interest rate impacts and digital strategy to regulatory changes and key risks.

• Stay agile as new information arrives. Narratives are updated live, letting you know when it might be time to revisit your investment thesis.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include .

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com