Bovespa is reaching now 3 years low and is at the same level as it was in middle of 2007 (5 years ago).
So it seems that Bovespa is trading at very attractive prices. Is that true?
So it seems that Bovespa is trading at very attractive prices. Is that true?
To try to answer that question, I went to Fundamentus and downloaded current data of all stocks that have 21 day average liquidity above 500K per day (178 companies). Statistics is as follow:
- Median Yield: 2.1%
- Average Yield (excluding outliers: 10 highest and lowest yields): 2.7%
- Median P/E (excluding companies that had loss): 14.4
- Average P/E (excluding companies that had loss and outliers: 10 highest and lowest): 17.0
- Average P/E (for P/E>6 and P/E<30): 15.0
- Median EV/EBIT (for values > 0): 11.8
- Average EV/EBIT (excluding outliers: 10 highest and lowest): 12.4
- Average ROE (excluding companies that had loss and outliers: 10 highest and lowest) : 15.5%
That is, as a group, Bovespa has a yield around 2.5%, a P/E of 15.0, EV/EBIT of 12.0 and a ROE of 15%.
Is that cheap? I unfortunately don't think so.
4 comments:
I agree. I think the earnings have been poor, so the numbers are bad.
I have a list of 168 companies that at an adequate price I would buy, divided in 4 groups from 1 to 4 (1 means excellent company I would like to buy and hold for a long time and 4 poor companies that I would buy just at a liquidation price).
If I consider just excellent and good companies (group 1 and 2), I get 90 assets and their current numbers from Fundamentus are:
Average yield: 3.3%
Average P/E: 16.5
Average ROE: 17.6%
A little better tough not compelling either.
All we have to do is just sit and wait.
Another way to see how ridiculous Bovespa is, I went to Google Finance and selected all companies with market value greater than 30B and P/E between 5 and 100 (to cut extremes ones).
It results 155 companies with a median P/E of just 14.2 (and you have to consider much lower interest rates)
One more sign that Bovespa isn't cheap: A&R has a P/E of 15 for its 100 best stocks, very close to the highest level ever.
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