The horizon conciliatory The fact that the market has been buying for a long time does not detract from confidence in the good work of the banking sector on the stock market in the coming months, and two entities are once again among the ranks of the Eco10, the index of quality ideas of elEconomista.es with the collaboration of 47 companies, during the last assessment of the year. BBVA and Banco Santander take over headquarters which lost in the previous revision of the index and replaces Aena and Amadeus, which on this occasion are not among the ten most repeated Spanish stock market companies in the experts’ portfolios.
These two new members join Eco10 alongside Inditex, Iberdrola, Repsol, IAG, Cellnex, Indra, Grifols and Catalana Occidente, which continue to be among the favorite stocks analysis firms that make up the orange indicator. During the June review, where the European Central Bank had not yet made the first rate cut but which had already been integrated by the market, the fears about how this measure could be reversed in the banks were clearly palpable and were the signatures of the tourism sector. sector those that had a greater representation within the index (the largest in its history). However, the flexibility of monetary policy does not seem to scare experts, who believe that the beginning of the process of lowering rates will take time to be reflected in the accounts of banking entities, knowing that, despite the first reductions have begun, rates remain at the highest levels of the last 20 years.
“Political uncertainty surrounding the UK and French elections and revenue risk from lower interest rates make the consensus view that the bad debt provision is below €50 billion, a significant tailwind for European banks’ earnings in 2024. However, the risk of credit deterioration can be pushed back to 2025 and 2026,” the experts explain. Bloomberg Intelligence on the outlook for European banks in the coming months.
Since its creation on June 16, 2006, The Eco10, which is the first indicator created by a Spanish newspaper, beats the Ibex 35 by more than 43 pointswith a historical return of 46.3% for the index of elEconomista.es compared to 2.6% of the Spanish reference. However, so far this year, the Ibex 35’s performance is slightly better than the Eco10, with an increase of 12.8% for the Spanish reference compared to 10.8% for the orange indexwith data as of August 30. And, in a year generally favorable to stocks – despite scares, such as last August – the Ibex 35 is showing particular solidity and is the most bullish index in Europe, even surpassing the Italian market, which defended this stock for the most part. of the price.
On this occasion, Inditex once again regains the throne as the Eco10 value that gathers the most trust among the participating companies and takes first place from Iberdrola. The company chaired by Ignacio Galán now occupies second place, but also manages to gather a higher percentage of votes within the index, with a current rate of 5.85% compared to 5.32% in the previous review. In third place is Repsol, which, together with Iberdrola and Inditex, is one of the regulars in the top 3. The company changes the chair with IAG regarding the latest review, and the airline is now in fourth position. Catalana Oeste, which debuted at orange indicator In the June review, this time it remains in last place, with a weight of 2.98% in the consensus portfolio that inspired the Eco10, with which it surpasses Amadeus, Inmobiliaria Colonial and Logista, which are about to compete for tenth place in the indexwith a technical equality of 2.87% in all three cases.
The insurance company is the one that offers a better recommendation (purchase) among the ten components of the index according to the algorithm developed by this media with FactSet data. Thus, seven of the ten have advice to take a position, and Iberdrola, BBVA and Inditex have advice to hold their shares. If we look at the PER (times in which the profit is reflected in the share price), which is in other words a way of knowing if a company is bought expensive or cheap, five of them are acquired with a multiplier of less than 10 times, and Indra offers a PER of 10.6 times.
Dividend yields would also be another strong point in this ranking, with four companies with yields above 4% by 2024. In this sense, BBVA and Repsol are in the lead, with a yield of 7.8% by 2024. Next come Banco Santander, with an annual dividend yield of 4.8%, and Iberdrola, with 4.5%. Tressis, who chooses the electricity company among his five favorite stocks, indicates that, once we have started the process of lowering tariffs, utilities are gaining importance again. “We believe that its diversification is essential [de Iberdrola] between production, distribution and renewable energies; growth forecasts higher than those of its sector and a dividend yield close to 4.5%”, the firm asserts.
New additions
Banco Santander’s weight in the June review within the orange portfolio had shrunk to less than 1.5% and this percentage caused its departure from Eco10. The loss of confidence from experts, however, lasted only a short time and The Cantabrian entity returns to the index with a weighting of 3.35%.It is the company that has increased its weight the most within Eco10.
Despite the updated rate cut cycle for Europe, the bank continues to benefit from the high level of interest rates and presented figures for the first half of the year that further improved the already historic figures for the first six months of the year. .2023, with a net profit of 6,059 million eurosThe financial institution attributes this growth mainly to the “strong increase that continues to be seen in the interest margin in all global companies.”
“Our investment case for Santander has been reinforced by the results. Our analyses mainly reflect the improving trends in Spain, the United States and Chile, but also the updated outlook for exchange rates. We believe that capital trends, rising costs and increasing income can now be supportive factors, also in terms of confidence,” Barclays explained.
The consensus of analysts gathered by Bloomberg sets the average price target for Santander shares for the coming months at 5.61 euros per share. This assessment would leave the entity an increase potential of 29% Looking ahead to the coming months and with them, its price could return to levels at which it has not been listed since the beginning of 2018. During this year, Banco Santander shares reached the level of 4.87 euros, which they were already expected to return to the levels of mid-2018. Although the company is now trading almost 11% below this price, it still shows annual stock market gains of almost 15%.
BBVA returns to the Eco10 and is the ninth company with the most weight in the portfolios. The bank has not stopped making headlines since it launched a hostile takeover bid for Banco Sabadell last May. The counterpart of the operation, let us recall, consists of one newly issued BBVA share for 4.83 shares of the Catalan bank. The price of the entity chaired by Carlos Torres has since suffered losses, although so far this year it continues to resist with a rise of 9.5% and offers a potential rise of 26% for the next 12 months compared to current levels. Thus, the latest known news in this regard was the approval of the European Central Bank to the public takeover bid, which was one of the essential prerequisites for the CNMV to authorize the operation.
The results continue to be one of the levers of the entity, which in the second quarter exceeded the experts’ consensus forecasts by almost 17%. Bloombergwith 2,794 million euros (out of the 2,390 million forecast). For the full year, the entity led by Carlos Torres and Onur Genç is expected to reach 9,188 million euros, 14.5% more than what was announced last year. BBVA presents a solid second quarter of 24 months, with an attributable profit of 2,794. million euros, which represents an increase of 14%, mainly driven by the strength of Spain and Turkey, but with improvements in all areas. Spain is the highlight of the quarter, driven by revenues, with strong loan growth supported by the NII [margen de interés] at +1% quarter-on-quarter, stable costs and stable CoR quarter-on-quarter,” Deutsche Bank explained.
“In net profit, BBVA exceeds in all geographies, the risk measures maintain a good reading as well as the progression of operating expenses below income, which allows to place the efficiency ratio at 39% against 42% which they have as objective for the year”, they provide from Renta 4 their latest results.
Amadeus, Colonial Real Estate and Logistics, at the “gates” of the entrance
Amadeus, Colonial and Logista are the three companies that on this occasion were about to be part of the composition of the orange index prepared by this media. The company of technological solutions for the tourism sector says goodbye to the orange index and gives way to the banks, after being part of it since March of this year. The distribution company, which was “excluded” from the index in the June revision, is also left at the door. Among Logista’s strengths, there is the best Ibex 35 recommendation, with efficient purchase advice, according to the algorithm used by this media with FacSet. Inmobiliaria Colonial, for its part, also “tramples” this revision, since an environment of normalization of interest rates, such as the one already observed, would be beneficial for the company.
