Banco do Brasil S.A. (OTC:BDORY) Faces Financial Challenges Amidst Low Valuation
By Tredu.com • 2025-08-19 09:00:03
Tredu
Banco do Brasil S.A. (OTC:BDORY) reported a significant decline in net adjusted profit by 60.2% year-over-year. The bank's price-to-earnings (P/E) ratio is approximately 7.70, suggesting a low valuation compared to its earnings. Liquidity and debt challenges are evident with a current ratio of approximately 1.97 and a debt-to-equity ratio of about 5.97.
Banco do Brasil S.A. (OTC:BDORY), a prominent state-run bank in Brazil, is known for its extensive range of financial services. As a key player in the Brazilian banking sector, it competes with other major banks like Itaú Unibanco and Bradesco. On August 15, 2025, BDORY released its quarterly earnings, with an actual earnings per share (EPS) of approximately R$0.49 (or about $0.09 USD) and revenue of R$21.2 billion. In the recent Q2 2025 earnings call, Banco do Brasil reported a significant decline in financial performance. The net adjusted profit fell by 60.2% year-over-year, amounting to 3.8 billion reais, or approximately $702.4 million. This was below the 5 billion reais expected by an LSEG poll, highlighting challenges the bank faces in maintaining profitability.
Despite the decline in profit, BDORY's valuation metrics suggest a relatively low valuation. The price-to-earnings (P/E) ratio is approximately 7.70, indicating that the stock is trading at a low price compared to its earnings. Additionally, the price-to-sales ratio of about 0.85 suggests the stock is undervalued relative to its sales, which may attract value investors. The bank's enterprise value to sales ratio is approximately 2.27, and the enterprise value to operating cash flow ratio is not currently available.
These figures reflect the company's valuation in relation to its cash flow, providing insight into its financial health. The earnings yield of approximately 13% indicates a strong return on investment for shareholders, despite recent profit declines. However, Banco do Brasil faces potential liquidity challenges, as indicated by a current ratio of approximately 1.97. This suggests the bank can meet short-term obligations. Additionally, the debt-to-equity ratio of about 5.97 highlights a higher level of debt compared to equity, which could impact the bank's financial stability.