Earn on the stock market with a bank title ready to explode upwards

Is there a stock to earn on the stock exchange that is undervalued, that has a good dividend and good growth prospects? It would seem so and this title is called Banca Sistema.

Before addressing its current valuation and growth prospects, we want to briefly show the current dividend yield of the bank security and its prospects for the next three years. As can be seen from the figure below, the dividend yield is currently over 6% and is in the upper part of the ranking of returns in Piazza Affari. The positive aspect is that in the next three years the return is expected to grow further to around 7%. It should also be noted that the pay-out is around 25% and as such is not a problem to continue to guarantee a dividend of the current level.

As regards, instead, the negative aspects of the title, we mention those that we believe are the two main ones

• the bank has provided a significantly higher number of loans than the deposits of the customers it holds.
• Banca Sistema has a high level of bad loans (6.78%).

For a view of the quotations of the Banca Sistema security click here.

The evaluation of Banca Sistema

Applying the calculation of fair value, as shown in the figure, the security is undervalued by more than 50%. Even the recommendations on analysts' Banca Sistema show an undervalued stock, but only around 15%. However it should be noted that analysts are cautious about the stock as the average consensus is Hold.

Growth prospects

Looking ahead to making money on the stock market, Banca Sistema represents an excellent opportunity also because the earnings growth and turnover prospects are much higher than both the reference sector and the Italian market, see chart below.

Graphic analysis and forecasting

Banca Sistema (BST) closed the session on 25 October at € 1.436, down 0.28% compared to the previous session.

The projection in progress is bullish, but from about 15 sessions the quotations are blocked within the trading range € 1.425 – € 1.5249. Only the break-up at the end of the day of one of these two levels could give direction to share prices. In particular, the break at the end of the € 1.5249 area day would project the prices of Banca Sistema towards the 1st price target in the area € 1.6855.