Sunday, February 4, 2018

Enel S.p.A. : chart update.

Here we have the chart update of Enel S.p.A. : the previous bullish trend has been confirmed ; indeed, the tops at 4.50 EUR and the top at 4.87 EUR are still valid (the same also for the dashed line, in the medium/long term) ; the pattern recognition (Dark Cloud Cover) has confirmed the change of the uptrend but strictly limited to the short-term. 
In this way, the last view was spot-on (for further info, please see the link http://michelecarollo.blogspot.it/2017/09/enel-spa-chart-framework.html). In the following charts, I propose the updated analysis with the previous levels. 

Chart from Investing.com
Chart from Investing.com

Now, let's look at the chart framework of the current situation. We must pay attention to the levels identified by the yellow circles (see also the FIBO retracements) : from the top to the bottom, 5.60, 4.80, 4.50, 3.40, 2.00. This is an overview to set a bullish or a bearish trading strategy, of course. 

Chart from Investing.com

We can notice a break in the previous parallel channel. This means that it is a first alert : it represents a price correction in the uptrend (even more so with a break of the support at about 5.00 EUR and then with a break of the top/FIBO level at about 4.80 EUR). The chart shows a volatility excess with the BBs indicator : that can be a rebound of the stock (for example, see the first red circle) or a confirmation of the abovementioned correction. The crossing of the EMA 50 and EMA 100 fits in this view. Therefore, the next trading sessions will be crucial in order to understand the market direction. 

Chart from Investing.com

If we extend the timeframe, the chart framework is very clear. Here we have a monthly timeframe : the price levels are those already mentioned. 

Chart from Investing.com

Sunday, December 10, 2017

The management efficiency : cost-to-income of the italian banks.

The cost to income ratio is equal to the operating costs divided by the intermediation margin. 
In other words, using the bank balance sheets items, it is equal to the following expression :

COST/INCOME RATIO : operating costs ("item 230") / total banking income ("item 120")

The meaning is : the lower the value expressed by the indicator, the greater the efficiency of the bank. Usually, the index is expressed as a percentage. Otherwise, the operating expenses are a percentage of the operating income. The ratio is also useful to value the productivity and the profitability for the banks. 

Here we have a sample : it is the peer group of the main banks, in Italy. In order to have a fair comparison, I used the adjusted results and I used the same criteria with regard to the same period, last year (we speak about the nine months ended on 30th September 2017 and about the nine months ended on 30th September 2016). For further info, please consult the notes below the table (1-7) and visit the section investor relations. 


At a glance, we can notice that : 

  • The efficiency is substantially the same compared to last year ; indeed, we can see a slight improvement, in general.
  • We have two banks that represent the outliers of the peer group : CVAL and CRG ; the ratios had a strong worsening, compared to the nine months of the year 2016. 
  • In the same way, we have other outliers (by the positive side), FBK and BGN. However, the two banks have a similar cost/income ratio, substantially, compared to last year. Reasoning by p.p. : by the negative side, about + 60 p.p. ; by the positive side, about from -2 to -7 p.p. (2017 vs 2016). 
  • Following the considerations of the previous points, it is more useful to focus on the median than on the mean. See the following table. 

Finally, the bar chart is much more explanatory. The two period have two colors, respectively, the light blue for the year 2017 and the red for the year 2016. The median is highlighted by a horizontal line.


With the aim of ranking the abovementioned banks, we have :

1) BGN ; 2) FBK ; 3) ISP ; 4) IFIS; 5) BPSO ; 6) MED ; 7) UCG ; 8) BMPS ; 9) BPER ; 10) UBI ; 11) CREDEM ; 12) BANCO BPM ; 13) CVAL ; 14) CRG.