Banco Macro S.A. - Value

The U.S. and European banks may still be dealing with debt but the South American banks are hot as their economies expand. Banco Macro S.A. (BMA) in Argentina, recently surprised on the Zacks Consensus for the 6th straight quarter. This Zacks #1 Rank (strong buy) is expected to grow earnings 20.4% in 2010.

Banco Macro is one of Argentina's largest private banks. It has several hundred branches nationwide and has expanded into the country through acquisitions. The bank has a presence in both the agriculture community as well as the urban areas of Buenos Aires.

Banco Macro Surprised By 21% in the Third Quarter

On Nov 4, Banco Macro announced its third quarter results and surprised on the Zacks Consensus by 20 cents. Earnings per share were $1.14 compared to the consensus at 94 cents.

Banco Macro has a good track record of surprising on the estimate.

Net income grew 40% to Ps.267.9 million from Ps.190.9 million in the year ago quarter.

Deposits rose 6% over the second quarter with private sector deposits increasing 5%.

Credit also expanded in the third quarter, as financing to the private sector jumped 10% from the second quarter. This growth was boosted by credit card and consumer loans which increased 30% and 10%, respectively.

The all-important average return on equity was 27.5% through the first 9-months of the year and is much higher than the 2009 ROE of 24.6% and the highest since 2004.

Zacks Consensus Estimates Rise

There are 3 estimates for both 2010 and 2011 which is a lot for a foreign bank. 2 out of the 3 have risen for 2010 since the third quarter report came out which has pushed the Zacks Consensus up to $3.94 from $3.60.

While the Zacks Consensus is also rising for 2011, to $4.05 from $3.85 per share, analysts expect less earnings growth of just 3%.

BMA Has Value

Banco Macro trades with a forward P/E of 12.8, which is under its peers at 16x. But the P/E isn't as useful when evaluating the bank stocks.

So I look at the price-to-book ratio. Banco Macro has a P/B of just about 3.0 which is the cut-off for where you want a bank to be (which is under 3.0.)

Its return on equity numbers, as recounted above, are outstanding however. The bank also pays out earnings to its shareholders, with a current yield of 1.8%.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.

 
BANCO MACRO-ADR (BMA): Free Stock Analysis Report
 
Zacks Investment Research