Based on the provided financial data and recent earnings report, here's a comprehensive analysis of ITUB's valuation:
Valuation Analysis
ITUB is currently trading at reasonable valuation levels with a P/E ratio of 6.42x in Q4 2024, which is significantly lower than its Q1 2024 level of 9.5x . The declining P/E ratio suggests the stock has become more attractively valued.
Financial Performance
The bank demonstrated strong financial performance in Q4 2024:
- Net profit of BRL10.9 billion with 18.2% YoY growth
- ROE at 22.1% consolidated (23.4% in Brazil)
- Improved credit quality with NPL decreasing to 2.4%
- Strong dividend distribution of BRL18 billion announced
Growth Outlook
Management has provided conservative but positive guidance for 2025:
- Loan portfolio growth: 4.5-8.5%
- Financial margin growth: 7.5-11.5%
- Commission fees growth: 4.0-7.0%
Market Position
The bank maintains a strong competitive position with successful digital transformation through the One Itaú project, which achieved 5.3 million client migrations and targets 15 million by end of 2025.
Conclusion
At current valuation levels, ITUB appears undervalued considering its:
- Strong profitability metrics
- Improving credit quality
- Robust dividend yield of 10.29%
- Solid growth outlook
- Successful digital transformation initiatives
The stock's current valuation multiples are below historical averages while maintaining strong fundamentals and growth prospects.