Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) wasn’t my favorite European bank back in December of 2017,
but I’ve still been surprised to see the greater than 15% decline in
the value of the ADRs, more or less matching the decline in Santander (SAN)
over the same period. Loan growth and capital generation have remained
lackluster, though credit quality and cost leverage are improving, and
the markets are considerably more worried about the near-term outlook
for the bank’s Mexican and Turkish operations.
I
believe conditions in Spain are improving, and I believe Mexico will
hold up better than currently expected. Turkey could get uglier from
here, but I think that’s already reflected in the share price. If a high
single-digit long-term earnings growth rate is still a reasonable
expectation (corresponding to a low double-digit ROE), BBVA shares look
meaningfully undervalued and worth a closer look.
Read more here:
Macro Worries, Sluggish Loan Growth, And Capital Generation Weighing On BBVA
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