Credicorp

Credicorp Ltd receives a 2-star quantitative star rating, reflecting our opinion that this share class is a somewhat unattractive choice, and investors should look elsewhere for more fruitful opportunities. The stock currently trades at a 12% premium over our quantitative fair value estimate of $338.83 per share; however, this estimate should be taken with a pinch of salt due to its high uncertainty rating. We require the price/fair value ratio to move a certain amount before the star rating can change. This stability-enhancing buffer is in effect for this stock.

The firm's liquidity weakens our estimated fair value. Excessive liquidity may suggest inefficient capital use or limited investment opportunities. For example, the firm's median trading volume over the past 60 days falls in the top 45% compared with global peers. High trading volumes could indicate a sharp change in business model or a new growth trajectory of the business. We believe this is a sign that shares could be expensive.

Alternatively, the company's profitability is reassuring. Highly profitable companies are often more resilient in recessions and are likely to generate stronger future cash flows for shareholders. The firm's earnings yield of 6.9%, for example, sits in the top 40% globally. This suggests that it is generating substantial earnings relative to its share price, which, despite our unfavorable price/fair value ratio, is a positive attribute.

In addition to the aforementioned drivers, our model considers momentum as part of its comprehensive analysis. This share class has outperformed the broader universe over the past year. This outperformance may signify a bull trap, in light of other detractors from our model.

The company's narrow quantitative moat rating indicates it could outearn its cost of capital and maintain robust margins for 10 years or longer. Its moat is bolstered by its strong financial health, which indicates low near-term bankruptcy risk.