Quick Win by the Algorithm: CBD Shows Growth Despite Troubled Economy

Quick Win by the Algorithm

On May 27th, 2016, the I Know First algorithm issued a bullish forecast for Companhia Brasileira de Distribuicao (CBD). CBD had a signal of 380.21 and a predictability of 0.78. As a result, in accordance with the forecast, the company’s stock had a return of 84.95% within 1 year, showing a quick win by the algorithm.

Quick Win

Companhia Brasileira de Distribuicao was created in Sao Paulo, Brazil, in 1981 as a fusion of several consumer product distributors. CBD is the second largest retail company in Latin America by revenue and operates under multiple store concepts. These include: Pao de Acucar, Extra, Assai, Casas Bahia, and Ponto Frio. These different business units include food retail, hypermarkets, home appliances, electronic goods, and general merchandise.

Quick Win

First-quarter fiscal 2018 predictions for CBD indicate strong growth across all segments, and improved performance over previous years. A steadily growing net-income of R$165 million, up 32% from $125 million in the same quarter last year. Earnings per share are also up 15% from R$0.47 to R$0.62 year-on-year.

Looking at CBD’s performance over the year 2016, we see that the company had a revenue of $3,595.38 million and net earnings of $2.45 million. Gross margins widened from 20.96% to 21.43% compared to the same period last year.

This strong earnings report is likely due to a few reasons. Although the Brazilian market is currently struggling, CBD has managed to reorganize their assets to continue growing. They are focusing on their sturdiest flagship business units. Namely, Pao de Acucar and Extra. These are two of the largest supermarkets and hypermarkets in Brazil. The company also eliminated superfluous companies from their organizational chart, such as Se Supermercados Ltda, and Xantocarpa Participacoes Ltda. The company has reported more efficient operational gains and savings because of this.

Brazil has not fully recovered from one of its worst recessions yet, but CBD continues to report stronger profit margins with each quarter. This has been quoted as being due to smart leadership, efficient company reorganization, and better inventory management.


Given these factors, we can see why CBD’s stock price increased.

This bullish forecast on CBD was sent to current I Know First subscribers on May 27, 2016. 

Before making any trading decisions, consult the latest forecast as the algorithm constantly updates predictions daily. You can use the algorithm for intra-day trading. The predictability tends to become stronger with forecasts over longer time-horizons such as the 1-month, 3-month and 1-year forecasts.