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Is Now The Time To Look At Buying Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA)?

Simply Wall St

Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA) saw a double-digit share price rise of over 10% in the past couple of months on the BME. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. However, what if the stock is still a bargain? Let’s examine Banco Bilbao Vizcaya Argentaria’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Banco Bilbao Vizcaya Argentaria

What is Banco Bilbao Vizcaya Argentaria worth?

According to my valuation model, Banco Bilbao Vizcaya Argentaria seems to be fairly priced at around 4.0% below my intrinsic value, which means if you buy Banco Bilbao Vizcaya Argentaria today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €5.47, then there isn’t much room for the share price grow beyond what it’s currently trading. Is there another opportunity to buy low in the future? Since Banco Bilbao Vizcaya Argentaria’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Banco Bilbao Vizcaya Argentaria look like?

BME:BBVA Past and Future Earnings, February 27th 2019

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company’s future expectations. Though in the case of Banco Bilbao Vizcaya Argentaria, it is expected to deliver a negative earnings growth of -8.7%, which doesn’t help build up its investment thesis. It appears that risk of future uncertainty is high, at least in the near term.

What this means for you:

Are you a shareholder? Currently, BBVA appears to be trading around its fair value, but given the uncertainty from negative returns in the future, this could be the right time to reduce the risk in your portfolio. Is your current exposure to the stock beneficial for your total portfolio? And is the opportunity cost of holding a negative-outlook stock too high? Before you make a decision on the stock, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on BBVA for a while, now may not be the most advantageous time to buy, given it is trading around its fair value. The price seems to be trading at fair value, which means there’s less benefit from mispricing. In addition to this, the negative growth outlook increases the risk of holding the stock. However, there are also other important factors we haven’t considered today, which can help gel your views on BBVA should the price fluctuate below its true value.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Banco Bilbao Vizcaya Argentaria. You can find everything you need to know about Banco Bilbao Vizcaya Argentaria in the latest infographic research report. If you are no longer interested in Banco Bilbao Vizcaya Argentaria, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.