Discounted Cash Flow Calculation for OTCPK:BMDP.Y using Excess Returns Model Model
The calculations below outline how an intrinsic value for Banca Monte dei Paschi di Siena is arrived at using the Excess Return Model. This approach is used for finance firms where free cash flow is difficult to estimate.
In the Excess Return Model the value of a firm can be written as the sum of capital invested currently in the firm and the present value of excess returns that the firm expects to make in the future.
The model is sensitive to the Return on Equity of the company versus the Cost of Equity, how these are calculated is detailed below the main calculation.
The current share price of
Banca Monte dei Paschi di Siena
is above its future cash flow value.
Often investors are willing to pay a
for a company that has a high dividend or the potential for future growth.
PRICE RELATIVE TO MARKET
We can also value a company based on what the stock market is willing to pay for
it. This is similar to the price of fruit (e.g. Mangoes or Avocados) increasing
when they are out of season, or how much your home is worth.
The amount the stock market is willing to pay for
Banca Monte dei Paschi di Siena's
is considered below, and whether this is a fair price.
Price based on past earnings
Banca Monte dei Paschi di Siena's earnings available for a low price, and how does
this compare to other companies in the same industry?
Banca Monte dei Paschi di Siena's earnings are expected to grow significantly at over 20% yearly.
Banca Monte dei Paschi di Siena's revenue is expected to grow by 4.7% yearly, however this is not considered high growth (20% yearly).
Past and Future Earnings per Share
The accuracy of the analysts who estimate the future performance data can
be gauged below. We look back 3 years and see if they were any good at
predicting what actually occurred. We also show the highest and lowest estimates
looking forward to see if there is a wide range.
Banca Monte dei Paschi di Siena's performance over the past 5 years by checking for:
Has earnings increased in past 5 years? (1 check)
Has the earnings growth in the last year exceeded that of the
industry? (1 check)
Is the recent earnings growth over the last year higher than the average annual growth over the
past 5 years? (1 check)
Is the Return on Equity (ROE) higher than 20%? (1 check)
Is the Return on Assets (ROA) above industry average? (1 check)
Has the Return on Capital Employed (ROCE) increased from 3 years ago? (1 check)
The above checks will fail if the company has reported a loss in the most recent
earnings report. Some checks require at least 3 or 5 years worth of data.
Banca Monte dei Paschi di Siena
has a total score of
1/6, see the detailed checks below.
Note: We use GAAP Net Income excluding extraordinary items in all our calculations.
Fundamentally a bank's business is based upon borrowing and lending money, for
this reason they typically have high levels of debt and we analyse them
This treemap shows a more detailed breakdown of
Banca Monte dei Paschi di Siena's finances. If any of them are yellow this
indicates they may be out of proportion and red means they relate to one of the
Liabilities and shares
The 'shares' portion represents any funds contributed by the owners (shareholders) and any profits.
Nearly all companies have debt. Debt in itself isn’t
however if the debt is too high, or the company can’t afford to pay the interest
on its debts this may have impacts in the future.
The graphic below shows equity (available funds) and debt, we ideally want to
see the red area (debt) decreasing.
If there is any debt we look at the companies capability to repay it, and
whether the level has increased over the past 5 years.
Management is one of the most important areas of a company. We look at
unreasonable CEO compensation, how long the team and board of directors have
been around for and insider trading.
TENURE AS CEO
Mr. Marco Morelli has been Chief Executive Officer, General Manager and Director of Banca Monte dei Paschi di Siena S.p.A. since September 20, 2016. Mr. Morelli is also a Founding Partner and Deputy Chairman of the Executive Committee of the Don Gino Rigoldi Foundation – Onlus. Mr. Morelli served as Deputy Chief Executive Officer and General Manager at Intesa Sanpaolo S.p.A. and served as its Director General since March 15, 2010. Mr. Morelli served as the Chief Executive Officer of State Street Bank S.p.A. and MPS Capital Services Banca per le Imprese S.p.A. (MPS Capital Services S.p.A.). Mr. Morelli served as Chief Executive Officer of Intesa Sanpaolo Servizi Transazionali SpA. He previously held a number of senior management roles within the Montepaschi Group. He was responsible for the corporate banking and capital markets at Banca Mps. From October 2012 to September 2016, he served as Vice Chairman of Bank of America Merrill Lynch for Europe, the Middle East and Africa and Chief Executive Officer of Bank of America Merrill Lynch Italia. From March 2010 to 2012, he served as Deputy General Manager and Deputy Chief Executive Officer of the Intesa Sanpaolo Group. He served as the Chief Executive Officer and Managing Director of MPS Banca per l'Impresa and MPS Finance. Before joining the MPS Group, Mr. Morelli served as Chief Executive Officer and General Manager of JP Morgan Italia. He served as the Chief Financial Officer and Senior Deputy Chief Executive Officer of Banca Monte dei Paschi di Siena SpA from August 2008 to March 2010. Mr. Morelli also served as the Deputy General Manager of Capital Markets of Banca Monte dei Paschi di Siena SpA from June 2006 to February 2010. He also served at JPMorgan, UBS, Samuel Montagne and KPMG in various locations across Europe. He is a Lecturer of Economic & Finance and Business Management at Luiss University, Rome. He served as the Chairman of the Board at Hopa S.p.A. He serves as Deputy Chairman of the Board and Director of Hopa S.p.A. He serves as a Member of the Board of Directors of Fondi Italiani per le infrastrutture (F2i), the Luiss University of Rome and Clessidra Private Equity Fund. He served as a Director of Banca IMI S.p.A. Mr. Morelli served as a Director of MPVenture SGR SpA. He served as a Director of Beni Stabili SIIQ S.p.A. (Beni Stabili SpA) until March 19, 2004. Throughout his career, he has also been a Director and Member of the Executive Committee of the Italian Banking Association. He was a Member of JP Morgan Europe’s Executive Committee. He holds a degree in Economics and Business Studies from Luiss University and is also a qualified Chartered Accountant and Auditor.
Insufficient data for Marco to compare compensation growth.
Insufficient data for Marco to establish whether their remuneration is reasonable compared to companies of similar size in United States of America.
Management Team Tenure
Average tenure of the
Banca Monte dei Paschi di Siena
management team in years:
The tenure for the Banca Monte dei Paschi di Siena management team is about average.
CEO, GM & Director
CFO & Acting Deputy GM
COO & Head of Organization and Operations
Head of Research and Investor Relations
Renzo Filippo Quagliana
Group General Counsel
Head of Compliance Area
Ilaria Maria Riva
Chief Human Capital Officer
Head of the North West Italy Area
Head of the Southern Lombardy and Emilia Romagna Area
Head of The Northern Tuscany Area
Board of Directors Tenure
Average tenure and age of the
Banca Monte dei Paschi di Siena
board of directors in years:
The average tenure for the Banca Monte dei Paschi di Siena board of directors is less than 3 years, this suggests a new board.
Banca Monte dei Paschi di Siena S.p.A. provides retail and commercial banking services in Italy. It operates through Retail Banking, Corporate Banking, Wealth Management, and Banca Widiba SpA segments. The company offers funding and lending services, insurance products, and financial and non-financial services to private banking customers; electronic payment services; wealth management and financial planning services; consultancy on financial services, such as tax planning, real estate, art, and legal advisory; fiduciary and trust services; and digital services. It also provides leasing and factoring services for businesses, artisans, and professionals; and medium-and long-term credit facilities, corporate finance, capital markets, and structured finance services. In addition, the company offers investment banking products and services; and custody and deposit services for dairy products on behalf of third parties. Further, it develops and manages ICT and telecommunication systems. The company operates a network of 1,745 branches, 233 specialized centers, and 2,954 ATM machines in Italy; 4 operational branches in London, New York, Hong Kong, and Shanghai; 10 representative offices in the areas of the European Union, Central-Eastern Europe, North Africa, India, and China; and 2 banks under foreign law with 7 branches in Belgium and 14 branches in France. Banca Monte dei Paschi di Siena S.p.A. was founded in 1472 and is based in Siena, Italy.
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