BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (BBVA): what the price requires
At today's price, BANCO BILBAO VIZCAYA ARGENTARIA, S.A. (BBVA) is priced for 16.6% return on equity. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/BBVA
Headline
| Field | Value |
|---|---|
| Ticker | BBVA |
| Company | BANCO BILBAO VIZCAYA ARGENTARIA, S.A. |
| Sector / Industry | Financial Services / Banks—Regional |
| Current price | $25.14/sh |
| Composition | Income and expense on insurance and reinsurance contracts 2% / Gross income 44% / Profit from continuing operations 18% / Profit 18% / Profit attributable to parent company 18% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | financials |
| Price-to-book | 2.22x |
| Return on equity now | 17.0% |
The implied return on book is non-physical at this price-to-book and is suppressed as misleading. The price sits beyond a 14.5% return on equity sustained for 40 years and is not resolvable as a sustainable-ROE point. The rarity read below is the honest signal.
Solve inputs: computed at a 9.7% cost of equity; ROE searched up to the 14.5% ROE ceiling.
How unusual the bet is: extreme
| Reference | Value |
|---|---|
| vs own history | +1.52σ |
| cohort percentile (of 120 peers) | 88 |
| sustained it ~10 years at this level | 56% |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by asset-based and earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 1.11x | 3 | expensive |
| Earnings | 0.81x | 2 | justifies |
| Relative | 0.46x | 3 | justifies |
| Growth | 0.77x | 2 | justifies |
Families that justify the price: Asset, Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 5.6%); the inversion above states its own rate.
Per-Model Detail (n=10)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | — | — | no | — |
| Bank Fair Value (P/TBV) | — | $35.26 | 0.71x | yes | TBVPS $11.52 × 3.06x (ROE (TTM) 18.0% / CoE 9.3%, g=5.0% (sustainable: 65% retention × ROE, 5% cap; not the terminal-growth assumption)) |
| Relative Valuation | Relative | $25.20 | 1.00x | yes | P/E 10x (static sector reference · 2026-04), scenarios: 8.0x / 10.0x / 12.0x (bear / base = reference held flat / bull), EV/EBITDA N/Ax |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | $29.77 | 0.84x | yes | Stage 1: 20% for 5yr, Stage 2: 3.5% perpetual |
| Simple Excess Return | Asset | $22.69 | 1.11x | yes | BV/sh $11.66, ROE (TTM) 18.0%, ke 9.3% |
| Two-Stage Excess Return | Asset | $31.25 | 0.80x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $36.48 | 0.69x | yes | Rev $57.4B, growth 30% (input: historical growth; tapered), Terminal P/S: 2.0x / 2.5x / 3.0x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $54.07 | 0.46x | yes | EPS $1.91, growth 28% (input: historical EPS growth), PEG=0.42 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | — | — | no | — |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | $22.40 | 1.12x | yes | √(22.5 × EPS $1.91 × BVPS $11.66) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | $61.73 | 0.41x | yes | EPS $1.91 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | — | — | no | — |
| PEG Fair Value | Relative | $71.74 | 0.35x | yes | EPS $1.91 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $20.68 | 1.22x | yes | EPS $1.91 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Share count CAGR (buyback) | -2.9% |
Deposit/float-funded balance sheet: debt is funding, not corporate leverage, and GAAP operating cash flow follows loan flows. Net-debt, interest-coverage, and cash-burn lenses do not apply. The solvency frame for a financial is regulatory capital and payout capacity (CET1, stress buffer, dividends plus buybacks against earnings).
Bullet Takeaways
- BBVA is a mature global bank earning an elite return on equity around 17%, run on a lean cost base and funded by deposits across Spain, Mexico and Turkey, with capital coming back to owners through a share count that keeps shrinking.
- The concentration is the risk: Mexico is more than 40% of group profit and Turkey adds emerging-market currency exposure, and the roughly 2.2x book the price pays leans on that return staying elite through a full cycle.
- Next read is Q2 2026 results on July 30, with buyback execution now the live story after BBVA's takeover bid for Sabadell lapsed in October 2025.
Bull Case
A bank this size has to be read on its own terms. The lens is not sales margin; it is the return the bank earns on its capital, how much of each euro of income survives its cost base, and how much of the profit comes back to owners. Read that way, BBVA looks strong. It is earning a return on equity around 17%, a level that puts it in the top tier of the industry, and it does it while keeping costs unusually low: an efficiency ratio near 38% in the first quarter of 2026, meaning only about 38 cents of every euro of income goes to running the bank. Against the U.S. giants that is a wide gap. JPMorgan earned a 15.7% return on equity at a 55% efficiency ratio in its most recent year, a good result that still sits behind BBVA on both the return and the cost line.
The distraction is now gone. BBVA's hostile bid for the smaller Spanish rival Sabadell lapsed in October 2025, with only about a quarter of Sabadell's shareholders tendering against the 50% BBVA needed. Rather than digesting a domestic acquisition, management turned straight back to returning capital, accelerating shareholder remuneration with a buyback and its largest interim dividend, and flagging a final tranche worth about 1.46 billion euros alongside the Q1 numbers. That shows up directly in the ownership: the share count has fallen about 3% a year over the last five years, and the dividend, 0.84 dollars a share on the U.S. listing, keeps rising.
The growth engine is Mexico. It is more than 40% of group profit, a market with low banking penetration and higher local interest rates than the euro area, which is why a bank there can earn more on each loan than one in Spain. Turkey is doing its part too: Garanti delivered 263 million euros of net profit in the first quarter of 2026, up 66% on the year, and group net interest income rose about 20% over the same period. The bull case is that this elite return is structural, built on demographics and rate spreads that persist, not a peak the cycle is about to take away.
Bear Case
The variable with the most leverage over BBVA is not the Spanish economy or the level of euro rates. It is the exchange rate on two currencies most owners rarely think about. More than 40% of group profit is earned in Mexico, with a further meaningful slice from Turkey, and those profits are earned in pesos and lira but reported in euros. Turkey has been run under hyperinflation accounting for years. A stronger euro, a peso that wobbles on trade or political news, or renewed lira weakness shrinks the reported earnings and pressures capital ratios on translation, no matter how well the local branches actually perform.
Connect that to what the price is paying. At about 2.2x book, the price capitalizes a return on equity near 17% as though the bank holds it for decades. History says that is demanding: only about half of the firms that reach this kind of return have held it for a decade. If that return drifts back toward the ordinary run of bank profitability, or below it in a harder credit cycle, the price-to-book the market now pays compresses with it. That is the mechanical risk in any bank: the multiple is a bet on how long the return lasts, and an emerging-market-weighted book of business is exactly where a long run of elite returns is hardest to guarantee.
None of this means the bank is weak, and the bear should concede as much. Capital is solid, with a CET1 ratio near 12.8%, above BBVA's own target range, and the cost discipline is real. But regulation adds its own steady drag through Spanish and European bank levies, and the political friction that surfaced during the Sabadell fight, when the government attached conditions to the deal, is a reminder that a systemic bank operates at the pleasure of several governments at once. Credit quality across the emerging-market book is the swing factor the day global growth slows.
Valuation
A bank is worth the return it earns on its capital, so the price is read off book value, not an operating multiple. At $25.14 (July 19, 2026), the market is paying about 2.2x book. Turn that around and the price is asking BBVA to keep earning a return on equity near 17%, a return that already sits in the elite tier for banks, and to sustain it far into the future. No bank holds that as a settled fact; it stands as a bound at the most demanding end of the scale, and the price sits at the very top of its peer group on book value.
The individual methods tell a gentler story, and the two are not in conflict. On today's economics the price lands about 1.1x where the asset value methods sit, so it is only modestly above them; earnings power reads it as cheap, near 0.8x its estimate; peer multiples put it cheapest, at roughly half their estimate; and the cash-flow methods land above the price as well. On a plain earnings basis BBVA trades at a price-to-earnings ratio around 12, against a sector reference near 10. The reconciliation is simple. Those methods credit the elite return the bank is earning right now, while the book-multiple read asks a different question, whether that return endures. Same price, two questions.
The balance-sheet frame for a bank is capital and payout, not net debt: deposits fund the loans, and the leverage that matters is regulatory. BBVA's CET1 ratio near 12.8% sits above its target range, and the share count has fallen about 3% a year, so capital is being handed back rather than hoarded. Against the U.S. peers the profitability is what stands out: JPMorgan earned a 15.7% return on equity at a 55% efficiency ratio in its latest year, both a step behind BBVA's roughly 17% return and its far leaner cost base. The question the price poses, then, is not whether BBVA is a good bank today. The methods agree that it is. It is whether an emerging-market-weighted franchise can carry an elite return all the way through a cycle.
Catalysts
The next scheduled read is second-quarter 2026 results on July 30. The first quarter set a high bar: net attributable profit of 2.99 billion euros, up 10.8% on the year and 14.1% at constant exchange rates, with net interest income up about 20% to 7.54 billion euros and return on tangible equity of 21.7%. The efficiency ratio improved to about 38% over the same period.
Capital return is the live story now that the takeover chapter is closed. BBVA's bid for Sabadell lapsed in October 2025 after only about a quarter of that bank's shareholders tendered, short of the 50% required. Management moved quickly to accelerate shareholder remuneration, executing a buyback of around 1 billion euros and paying a record interim dividend, and it has flagged a further buyback tranche of about 1.46 billion euros.
The items to watch from here are largely external. The Mexican peso and the Turkish lira drive how much of the local profit survives translation into euros, and the rate paths in both countries shape the lending spreads. Any renewed Spanish or European bank-tax action is a further swing factor on the payout. Analyst sentiment is mildly positive, with roughly three-quarters of the 32 analysts covering the stock rating it a buy and an average target near $25.57, essentially at the current price.
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
BBVA disclosures and Q1 2026 earnings release, April 30 2026 · company earnings calendar · BBVA offer result, October 2025 · BBVA Q1 2026 earnings release, April 30 2026 · JPMorgan Chase FY2025 10-K · BBVA/Sabadell offer result, October 2025 · BBVA disclosures, 2026 · Spanish government review of the BBVA-Sabadell merger, 2025 · analyst consensus via ChartMill, July 2026