BBVA (BME:BBVA) Stock May Still Trade At A Discount After Its 428% Run
Banco Bilbao Vizcaya Argentaria has delivered a very strong 5 year return, yet the valuation work suggests the stock may still trade below its intrinsic value based on both the Excess Returns model and market multiples.
- The stock has returned about 427.7% over 5 years, which puts a lot of attention on whether recent gains already reflect what the business is worth.
- Progress on the €1.46b share buyback and exposure to digital identity through Veridas can support long term value, while the pending trial related to the Villarejo case may weigh on how investors price legal and reputation risk.
- Banco Bilbao Vizcaya Argentaria screens as undervalued on most checks, with a high value score of 5 out of 6, which points to the broader checks leaning cheap rather than expensive.
The issue now is whether that apparent discount, with the intrinsic value estimate indicating around 36.9% undervaluation, still offers enough margin of safety after such a strong 5 year run.
Does Banco Bilbao Vizcaya Argentaria Look Undervalued on Excess Returns?
The Excess Returns model evaluates how much value Banco Bilbao Vizcaya Argentaria can generate above the cost of its equity capital. For BBVA, the model uses a book value of €9.60 per share and a stable earnings figure of €2.38 per share, based on weighted future return on equity estimates from 18 analysts.
With an average return on equity of 20.76% and a cost of equity of €0.99 per share, the implied excess return of €1.39 per share feeds into a stable book value assumption of €11.49 per share. Together, these inputs give an intrinsic value estimate of about €34.99 per share, which sits roughly 36.9% above the current share price and suggests that the stock is trading at a discount. The National Court decision to open a trial in the Villarejo case helps explain why the market may keep the price below the value indicated by the model.
On this Excess Returns view, Banco Bilbao Vizcaya Argentaria stock currently screens as undervalued.
Our Excess Returns analysis suggests Banco Bilbao Vizcaya Argentaria is undervalued by 36.9%. Track this in your watchlist or portfolio, or discover 223 more high quality undervalued stocks.
Does Banco Bilbao Vizcaya Argentaria Look Undervalued on Earnings?
P/E is a useful yardstick for Banco Bilbao Vizcaya Argentaria because earnings are a key focus for bank investors and are available for direct comparison with peers. BBVA currently trades on a P/E of about 11.8x, which is close to the wider banks industry average of 11.7x and below the peer group average of 13.8x. This indicates that the stock is not priced at a premium to its sector despite its large size and established franchise.
On Simply Wall St’s fair P/E estimate of 13.4x, which reflects BBVA’s specific mix of growth expectations, profitability, size and risk factors, the current 11.8x level sits below what the model suggests would be a more neutral valuation. That gap implies investors are applying a discount to the earnings stream, even as other checks such as the Excess Returns model point to value above the current share price.
On the P/E multiple, Banco Bilbao Vizcaya Argentaria stock appears undervalued relative to what its earnings profile would typically command.
See what the numbers say about this price — find out in our valuation breakdown.
The Banco Bilbao Vizcaya Argentaria Narrative: What Would Justify Today's Price?
For Banco Bilbao Vizcaya Argentaria, Simply Wall St Narratives sit between the valuation puzzle above and the practical question of what would need to happen to growth, margins and earnings for the stock to be worth materially more or less than today's price, and they live on the Community page. Each Narrative ties a fair value to a particular combination of potential catalysts and risks for Banco Bilbao Vizcaya Argentaria's business, so you can see which storyline the company appears to be tracking over time.
Community views on Banco Bilbao Vizcaya Argentaria sit far apart, with one camp focusing on capital return potential and the other on execution and disruption risk.
Bull case: 18% undervalued
"Dynamic expansion in open banking, embedded finance, and sustainability-linked financial products, where BBVA commands an early-mover advantage, holds potential to unlock new fee streams…"
Read the full Bull Case to see why Banco Bilbao Vizcaya Argentaria could be undervalued
Bear case: 42% overvalued
"Accelerated digital disruption and the rapid rise of fintech challengers threaten to erode BBVA's traditional banking customer base, as new, agile entrants offer more attractive, lower-cost digital products…"
Read the full Bear Case to see why Banco Bilbao Vizcaya Argentaria could be overvalued
Do you think there's more to the story for Banco Bilbao Vizcaya Argentaria? Head over to our Community to see what others are saying!
The Bottom Line
Banco Bilbao Vizcaya Argentaria screens as undervalued on both the intrinsic value estimate from the Excess Returns model and on earnings multiples, which is unusual given how far the stock has already moved. With several valuation checks pointing in the same direction, the current discount appears to reflect a broad market stance rather than a quirk of any single model. From here, the key question is whether the legal and reputation risks highlighted by the Villarejo case ultimately justify that gap, or whether the market is underestimating the resilience of BBVA’s earnings and capital return plans.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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