Is it Time to Buy BNP Paribas?

• Stock Name:  BNP Paribas
• Current Stock Price:  €56.82
• Our Target Price:  €67 
• Upside potential:  17%
• Analyst Target Price: €76
• Dividend Yield:  6.8%
• Stock Exchange:  European Stock Exchanges 
• Market Cap:   €65 billion
• Beta:   1.7

BNP Paribas SA provides various banking and financial products and services in Europe, the Middle East, Africa, the Americas, and the Asia Pacific. It operates through three divisions: Corporate & Institutional Banking; Commercial, Personal Banking & Services; and Investment & Protection Services. The Corporate & Institutional Banking division offers capital market, securities, investment banking, financing, risk management, cash management, and financial advisory services for corporate clients and institutional investors. The Commercial, Personal Banking & Services division provides financing and equipment leasing services, mobility, and digital banking services, as well as current accounts, savings products, bancassurance, insurance products and services, and consumer loans. The Investment & Protection Services division provides protection, savings, investment, and real estate services to support individuals, professionals, corporate clients, and institutions. The company was formerly known as Banque Nationale de Paris and changed its name to BNP Paribas SA in May 2000. BNP Paribas SA was founded in 1822 and is headquartered in Paris, France.

• Sales Growth: Sales have grown in the past 5 years but at a slow pace of just 2% per annum on average.  
• Earnings per Share Growth: Excellent historical EPS growth rising from €5.73 to €8.10 which is an average growth rate of 8% per annum. 
• Dividend Growth: Dividends continue to grow. 
• Operating Margins: Operating Margins are stable and have improved over the past 5 years. 
• Debt to Equity: Debt to equity looks high but is quite normal for financial institutions. Debt to Equity is stable. 
• Average PE: The company has traded at a PE of roughly 8 for the past 5 years. 
• Average P/S: Price to Sale has been very consistent over the past 5 years ranging between .83 to 1.18. Median P/S is 0.97. 
• Shares Outstanding: In recent years, the company has bought back shares and reduced the shares outstanding.

• Revenue Estimate 2024: €49B. This is an average of 17 analyst estimates. Lowest estimate is €46.7B and the highest estimate is €50B. 
• EPS Estimate 2024: €9.25. This is an average of 17 analyst estimates. Lowest estimate is €8 and the highest estimate is €10. 
• Forecasted Share Price 2024 based on P/S: €50 – because growth rate for revenue is expected to increase in next 2 years we are using a P/S of 1 instead of the average. 
• Forecasted Share Price 2024 based on EPS: €74
• Analyst 12 month Target Price: €76. This is based on an estimate of 23 analysts. Lowest estimate €59. Highest estimate was €90. 
• Average of all three estimates above: €67 
• Upside Potential: 17% 

• Traditional Support & Resistance: A common area of support in the past 12 months has been €54.75 (3.5% below current price). A common area of resistance has been €62.50 (8.5% above current price). 
• Moving Averages: The 50 and 200 day simple moving averages are currently acting as resistance and congregating around the €58. A break above this area will bring €62.50 into play. A failure to break above this area will bring support at €54.75 back into play. 
• Fibonacci: Next fibonacci support is at €52 (8% Lower than current price). Next Fibonacci resistance is at €58. 
• Short Term trend: Short term trend is up but momentum is slowing as we approach the resistance areas mentioned above. 
• Medium term Trend: Medium Term Trend is sideways. 

• Earnings: https://finance.yahoo.com/news/bnp-paribas-posts-line-q3-050921870.html
• Share Repurchase: https://finance.yahoo.com/news/bnp-paribas-group-share-buyback-170000757.html

As with any stock investment, there are no guarantees. Circumstances and fundamental outlook can change for the better and also for the worse. A smart investor will allocate less than 5% of their portfolio in this stock. For example, if we have €10K in our portfolio. We will invest no more than €500 in this stock. 

BNP Paribas is a stock offering a significant dividend yield of 6.8%. Fundamental expectations from analysts suggest that the stock price could also rise 20% from current levels assuming they hit sales and earnings expectations. The Technical outlooks suggest that we are at the lower end of a sideways trending channel. The company is also continually repurchasing their own shares which should help support the stock price. 

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Disclaimer

This report does not constitute financial advice. This report is to be used in the context of education and training in the stock market. The purpose of the report is to highlight the evaluation process when investigating a stock. Members of Share Navigator can then use their personal Simulated Trading Account to practice buying and selling shares. 

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