Author: admin

For a profitable bank like Banco Bilbao Vizcaya Argentaria, the P/E ratio is a useful way to relate what you are paying for each share to the earnings that the business is currently generating. It gives you a quick sense of how the market is pricing those earnings today.

What counts as a “normal” P/E will usually reflect how the market views a company’s growth prospects and risk profile. Higher expected growth or lower perceived risk can justify a higher multiple, while lower growth or higher risk can point to a lower one.

Banco Bilbao Vizcaya Argentaria trades on a P/E of 12.14x, compared with the Banks industry average of 11.13x and a peer group average of 11.64x. Simply Wall St’s Fair Ratio for the company is 13.08x, which is a proprietary estimate of what the P/E could be based on factors such as earnings growth, profit margins, industry, market cap and risk. This Fair Ratio goes beyond simple peer or industry comparisons because it adjusts for those company specific characteristics rather than assuming all banks deserve the same multiple. On this basis, the current 12.14x P/E sits below the 13.08x Fair Ratio, which indicates that the shares appear undervalued on this measure.

Result: UNDERVALUED

P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1426 companies where insiders are betting big on explosive growth.

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simply your story about a company linked directly to your own forecasts and fair value estimate. On Simply Wall St, a Narrative lets you set assumptions for future revenue, earnings and margins, then connects that story to a financial model that produces a fair value that you can compare with the current share price to help you decide whether a stock looks appealing or not. Narratives live in the Community section on the platform, where millions of investors share and refine their views, and they update automatically when fresh information such as earnings or news is added, so your story never sits still. For example, one Banco Bilbao Vizcaya Argentaria Narrative might argue for a relatively high fair value based on stronger profitability assumptions while another might suggest a lower fair value based on more cautious earnings expectations.

Do you think there’s more to the story for Banco Bilbao Vizcaya Argentaria? Head over to our Community to see what others are saying!

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 BBVA.MC.

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