Back to top

Image: Bigstock

UBS Group Witnesses Bottom-Line Pressure: Time to Sell?

Read MoreHide Full Article

UBS Group AG’s (UBS - Free Report) profitability remains under pressure due to prevailing unfavorable interest rates and strict regulations in the domestic economy.

The company has witnessed 6.2% downward revision in the Zacks Consensus Estimate for current-year earnings to $1.37 over the last 30 days.

Shares of UBS Group have gained 9.7% year to date, underperforming the 19.2% rally of the industry.

UBS Group’s net interest income remains under pressure owing to the negative interest rate environment in the domestic economy. Also, appreciation of the Swiss franc against other currencies is likely to impact earnings, as a significant part of the company’s operating income is denominated in non-Swiss franc currencies.

Also, the company’s capital deployment activities seem unsustainable as its debt-to-equity ratio compares unfavorably with that of the industry.

Further, UBS Group faces a number of claims and legal proceedings, which might affect its financials.

However, UBS Group plans to achieve CHF 2.1 billion in net cost reduction by the end of 2017. It has successfully brought down expenses in the first six months of 2017. Such initiatives should support its bottom-line growth.

Currently, the stock carries a Zacks Rank #4 (Sell).

Some foreign banks worth considering are Bank of N.T. Butterfield & Son Limited (NTB - Free Report) , Royal Bank Scotland PLC and Shinhan Financial Group (SHG - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Bank of N.T. Butterfield & Son’s Zacks Consensus Estimate for current-year earnings have been revised 2.2% upward in the past 60 days. The company’s share price has risen almost 22% year to date.

Royal Bank Scotland’s current-year earnings estimates have been revised 16.7% upward over the past 60 days. Also, its shares have gained 32% so far this year.

Shinhan Financial’s Zacks Consensus Estimate for current-year earnings has moved 8.5% up over the past 60 days. Its share price has rallied 17.6% year to date.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


UBS Group AG (UBS) - free report >>

Shinhan Financial Group Co Ltd (SHG) - free report >>

Bank of N.T. Butterfield & Son Limited (The) (NTB) - free report >>

Published in