7 Mid Cap Stocks with Low PE Ratios

03. Banco Macro S.A. (NYSE:BMA)

Forward P/E ratio as of October 2: 3.35 

Number of Hedge Fund Holders: 13

Banco Macro S.A. (NYSE:BMA) is an Argentinian financial institution offering a comprehensive range of banking products and services to both retail and corporate clients. With a Forward Price-to-Earnings (P/E) Ratio of 3.35 as of October 2, the company stands out as an undervalued mid-cap stock, making it an attractive pick for value-oriented investors. Despite challenging macroeconomic conditions in Argentina, Banco Macro continues to maintain strong financial fundamentals.

In the second quarter of 2024, Banco Macro S.A. (NYSE:BMA) reported total net income of ARS233.2 billion, which was significantly impacted by a lower mark-to-market value of its government securities. However, if these securities had been valued at amortized cost, net income would have been approximately ARS300 billion higher, demonstrating the potential upside in the company’s financial performance.

The bank’s operating income before administrative and personnel expenses reached ARS2.38 trillion for the first half of 2024, representing a 36% increase from the same period in 2023. This growth was driven primarily by higher net operating income, which rose 41% year-over-year to ARS1.59 trillion. Additionally, the provision for loan losses in Q2 2024 fell by 26% compared to Q1 2024, reflecting improved credit quality and risk management practices.

Banco Macro S.A. (NYSE:BMA) net interest margin, including foreign exchange effects, stood at 19.9% in Q2 2024, highlighting its ability to generate consistent returns despite declining interest income. The company’s asset quality remains strong, with a non-performing loan ratio of 1.23% and a robust coverage ratio of 181.4%, which indicates that it is well-positioned to manage potential credit risks.

On the funding side, total deposits increased by 13% quarter-over-quarter to ARS6.74 trillion. The growth was primarily driven by a 23% increase in demand deposits, which underscores Banco Macro S.A. (NYSE:BMA) solid liquidity position. However, the number of hedge funds holding Banco Macro dropped to 13 as of Q2 2024, down from 18 in the previous quarter, reflecting a cautious stance by institutional investors amidst economic uncertainties.

Overall, Banco Macro S.A. (NYSE:BMA) low valuation and resilient performance amidst macroeconomic headwinds make it a compelling addition to the list of mid-cap stocks with low P/E ratios. The company’s strong fundamentals, solid asset quality, and potential earnings upside position it well for future growth.