BBVA (BBVA) is one of those companies that seems continually beset by doubters and skeptics, even though the company has been one of the more consistent earnings performers among European banks over the last 20-plus years. Most recently, bearish analysts have fretted about the risks from the Turkish operations (even though they’re well-contained), weaker results in Mexico (even though it’s improving), and ongoing lackluster performance in Spain (a valid concern).
With the sale of Compass to PNC (PNC) complete, BBVA has surplus capital and management has already committed to a meaningful buyback of 10% of shares. I do believe management may take another look at M&A in its home market of Spain, or possibly in other markets, and that could be a risk to sentiment, but the shares continue to look undervalued on long-term core growth in the mid-single-digits.
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