Itau Unibanco (ITUB) AI Stock Analysis

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Itau Unibanco

(NYSE:ITUB)

76Outperform

Itau Unibanco's strong revenue growth and profitability, along with attractive valuation, contribute positively to the overall score. However, the negative cash flow and potential overbought technical indicators present risks. The earnings call provided a balanced view of achievements and challenges, supporting a positive outlook, albeit with caution on competitive pressures and operational challenges.

Positive Factors

Asset Quality

The NPL ratio improved by 10 basis points, driven by improvements in SMEs and individual loans.

Capital Distribution

The management announced additional capital distribution of R$18bn, which includes R$15bn in dividends and R$3bn for share buyback.

Capital Generation

Guidance implies significant organic capital generation, supporting another year of healthy capital distribution.

Financial Performance

The company delivered a net income growth of 16% and a return on equity of 22.2%.

Negative Factors

Fee Growth

Fee growth decelerated to 5% year-over-year, influenced by declining current account tariffs and deceleration of credit card fees.

Net Interest Income

Market net interest income fell by 14% quarter-on-quarter, negatively impacted by lower trading gains and the widening of the yield curve.

Itau Unibanco (ITUB) vs. S&P 500 (SPY)

Market Cap

$54.04B

Dividend Yield7.32%

Average Volume (3M)23.78M

Price to Earnings (P/E)8.3

Beta (1Y)0.59

Revenue Growth-7.01%

EPS Growth15.18%

CountryUS

Employees99,600

SectorFinancial

Sector Strength81

IndustryBanks - Regional

Share Statistics

EPS (TTM)0.64

Shares Outstanding5,330,429,700

10 Day Avg. Volume17,899,781

30 Day Avg. Volume23,777,557

Financial Highlights & Ratios

PEG Ratio0.55

Price to Book (P/B)N/A

Price to Sales (P/S)2.30

Price to Cash Flow (P/CF)N/A

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$6.70

Price Target Upside26.42% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Itau Unibanco Business Overview & Revenue Model

Company DescriptionItaú Unibanco Holding S.A. (ITUB) is one of the largest financial institutions in Latin America, headquartered in São Paulo, Brazil. The bank operates in the financial and insurance sectors, providing a wide range of services including commercial and investment banking, asset management, insurance, and credit services. Itaú Unibanco serves millions of individual and corporate clients, offering products such as loans, credit cards, mortgages, and wealth management services, along with digital banking solutions to enhance customer experience.

How the Company Makes MoneyItaú Unibanco generates revenue primarily through interest income from loans and advances to customers, which is a significant component of its income. The bank also earns through fees and commissions from services like asset management, insurance, and credit card operations. Additionally, income from trading and investment banking activities, such as underwriting and advisory services, contributes to its earnings. Itaú Unibanco benefits from its expansive retail network and digital platforms, enhancing its ability to cross-sell products and maintain customer loyalty. Strategic partnerships and investments in technology further bolster its operational efficiency and competitive positioning in the financial services industry.

Itau Unibanco Financial Statement Overview

Summary

Itau Unibanco has shown robust revenue and profitability growth, with improved leverage and shareholder returns. However, the negative cash flow in 2024 presents a significant risk.

Income Statement

Positive

Itau Unibanco demonstrated strong revenue growth, with a significant increase from 2023 to 2024. The net profit margin improved alongside a healthy EBIT margin, indicating efficient cost management. However, the absence of EBITDA in 2024 limits a full analysis of operational performance.

Balance Sheet

Positive

The company's debt-to-equity ratio has improved, showing a decrease in leverage compared to previous years. The equity ratio remains stable, and return on equity has shown positive trends, reflecting strong shareholder value creation. However, the substantial total debt remains a point of concern.

Cash Flow

Neutral

The cash flow analysis indicates a challenging year with negative free cash flow in 2024 and a significant drop in operating cash flow. Despite this, the historical trend shows strong cash generation capabilities, which may help in future recovery.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
135.74B	124.53B	138.60B	121.83B	94.68B
	Gross Profit
135.74B	124.53B	138.60B	121.83B	94.68B
	EBIT
56.32B	51.51B	175.01B	40.61B	9.06B
	EBITDA
0.00	44.43B	0.00	45.30B	8.89B
	Net Income Common Stockholders
41.09B	33.10B	29.21B	26.76B	15.06B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
46.21B	40.58B	331.77B	324.67B	301.91B
	Total Assets
2.85T	2.54T	2.32T	2.07T	2.02T
	Total Debt
321.14B	451.83B	427.96B	321.22B	299.56B
	Net Debt
274.93B	223.42B	217.24B	102.17B	107.59B
	Total Liabilities
2.63T	2.34T	2.15T	1.90T	1.86T
	Stockholders Equity
211.09B	190.18B	167.95B	152.86B	142.99B
Cash Flow		Free Cash Flow
-98.15B	68.30B	121.47B	51.02B	54.18B
	Operating Cash Flow
-96.32B	77.49B	129.97B	60.11B	59.49B
	Investing Cash Flow
6.97B	-31.23B	-73.60B	-4.84B	753.00M
	Financing Cash Flow
81.69B	57.47B	-31.71B	-31.46B	288.39B

Itau Unibanco Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price5.30

Price Trends

50DMA

5.25

Positive

100DMA

4.96

Positive

200DMA

5.17

Positive

Market Momentum

MACD

0.12

Positive

RSI

58.00

Neutral

STOCH

20.30

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For ITUB, the sentiment is Neutral. The current price of 5.3 is below the 20-day moving average (MA) of 5.50, above the 50-day MA of 5.25, and above the 200-day MA of 5.17, indicating a neutral trend. The MACD of 0.12 indicates Positive momentum. The RSI at 58.00 is Neutral, neither overbought nor oversold. The STOCH value of 20.30 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for ITUB.

Itau Unibanco Risk Analysis

Itau Unibanco disclosed 50 risk factors in its most recent earnings report. Itau Unibanco reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Itau Unibanco Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CIB	77 Outperform	$10.10B	11.71	15.62%	15.48%	-0.15%	8.78%
ITUB	76 Outperform	$54.04B	8.28	20.84%	7.32%	-7.01%	15.18%
BSAC	73 Outperform	$10.54B	11.32	16.05%	2.62%	-22.63%	32.31%
BCH	73 Outperform	$13.43B	10.13	21.96%	6.12%	-19.01%	-13.44%
BBD	70 Outperform	$21.55B	7.26	10.44%	1.36%	-8.55%	13.58%
BSBR	70 Neutral	$17.08B	13.78	11.61%	4.78%	-3.94%	31.52%
Sector *	63 Neutral	$12.88B	9.21	9.18%	4.78%	16.30%	-8.66%

* Financial Sector Average

Performance Comparison

ITUB

Itau Unibanco

5.30

-0.28

-5.02%

BBD

Banco Bradesco SA

2.11

-0.60

-22.14%

BCH

Banco De Chile

24.84

2.98

13.63%

BSBR

Banco Santander Brasil

4.46

-0.93

-17.25%

BSAC

Banco Santander Chile

21.04

1.41

7.18%

CIB

Bancolombia

37.59

6.97

22.76%

Itau Unibanco Earnings Call Summary

Earnings Call Date: Feb 5, 2025 | % Change Since: 3.31% | Next Earnings Date: May 12, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong financial performance and growth across various segments, with notable achievements in profitability and ESG initiatives. However, it also acknowledged challenges in loan migration, competition, and the impact of FX rates on loan growth.

Highlights

Record Earnings and Profitability

The bank closed 2024 with an annual profit of BRL41.4 billion, showing a strong growth of 18.2% year-over-year. The consolidated ROE reached 22.1% and 23.4% in Brazil.

Loan Portfolio Expansion

The loan portfolio grew to BRL1.359 trillion, a 15.5% increase over December 2023. This growth was achieved with improved credit quality, reducing long-term NPL by 0.5 percentage points compared to December 2023.

Strong Performance in Financial Margin with Clients

Financial margin with clients grew 8.3% year-over-year, reaching BRL108 billion in 2024.

Dividend and Share Buyback Program

An additional distribution of BRL18 billion was announced, including BRL15 billion in dividends and interest on capital, and BRL3 billion in share buybacks.

Recognition and Achievements

The bank was recognized as a Value Company of the Year and made significant progress in ESG initiatives, increasing its commitments in sustainable finance.

Improved Credit Quality

The cost of credit decreased from BRL36.9 billion in 2023 to BRL34.5 billion in 2024, with a reduction in NPL indicators.

Lowlights

Challenges in Loan Migration

The One Itau project aimed to migrate 15 million clients, but only 5.3 million were migrated by the end of 2024, with the remaining expected to complete in 2025.

Impact of FX Rate on Loan Growth

A significant portion of the loan portfolio growth is attributed to FX rate effects, which led to exceeding the guidance upper range.

Moderate Growth in Investment Banking

Despite record-breaking performance in 2024, a decrease of 30% to 40% in capital market volumes is expected for 2025.

High Competition in the Market

Increased competition, especially in the high-income segment, was noted as a challenge for maintaining growth and margins.

Company Guidance

During the earnings call, guidance for 2025 was provided with several key financial metrics outlined. The company expects loan portfolio growth to range between 4.5% and 8.5%, while the financial margin with clients is anticipated to increase from 7.5% to 11.5%. The financial margin with the market is projected to be between BRL1 billion and BRL3 billion. Non-interest expenses are expected to grow from 5.5% to 8.5%. Credit cost is projected to nominally range from BRL34.5 billion to BRL38.5 billion, and the effective tax rate is expected to be between 27% and 29%. The guidance included expectations of a 2.2% GDP growth, a year-end SELIC rate of 15.75%, and inflation at 5.8% for 2025.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.