In This Article:
For Banimmo SA.’s (ENXTBR:BANI) shareholders, and also potential investors in the stock, understanding how the stock’s risk and return characteristics can impact your portfolio is important. BANI is exposed to market-wide risk, which arises from investing in the stock market. This risk reflects changes in economic and political factors that affects all stocks, and is measured by its beta. Not all stocks are expose to the same level of market risk, and the market as a whole represents a beta value of one. A stock with a beta greater than one is expected to exhibit higher volatility resulting from market-wide shocks compared to one with a beta below one.
See our latest analysis for Banimmo
What does BANI’s beta value mean?
Banimmo’s beta of 0.43 indicates that the stock value will be less variable compared to the whole stock market. This means that the change in BANI’s value, whether it goes up or down, will be of a smaller degree than the change in value of the entire stock market index. BANI’s beta indicates it is a stock that investors may find valuable if they want to reduce the overall market risk exposure of their stock portfolio.
Could BANI’s size and industry cause it to be more volatile?
A market capitalisation of €35.55M puts BANI in the category of small-cap stocks, which tends to possess higher beta than larger companies. Moreover, BANI’s industry, real estate, is considered to be cyclical, which means it is more volatile than the market over the economic cycle. As a result, we should expect a high beta for the small-cap BANI but a low beta for the real estate industry. This is an interesting conclusion, since both BANI’s size and industry indicates the stock should have a higher beta than it currently has. A potential driver of this variance can be a fundamental factor, which we will take a look at next.
Can BANI’s asset-composition point to a higher beta?
An asset-heavy company tends to have a higher beta because the risk associated with running fixed assets during a downturn is highly expensive. I examine BANI’s ratio of fixed assets to total assets to see whether the company is highly exposed to the risk of this type of constraint. With a fixed-assets-to-total-assets ratio of greater than 30%, BANI appears to be a company that invests a large amount of capital in assets that are hard to scale down on short-notice. Thus, we can expect BANI to be more volatile in the face of market movements, relative to its peers of similar size but with a lower proportion of fixed assets on their books. However, this is the opposite to what BANI’s actual beta value suggests, which is lower stock volatility relative to the market.