Credit Suisse Group

by Zacks Equity Research

November 15, 2012 |

Shares of Credit Suisse Group (CS - Free Report) have advanced following its third quarter results and the announcement of its cost savings target of CHF 4.0 billion ($4.2 billion) by 2015. Furthermore, this financial services company, which achieved Zacks #1 Rank (Strong Buy) status on November 7, is an attractive value investment given a P/B multiple of just 0.7.

Third Quarter Results

On October 25, Credit Suisse Group reported third quarter earnings of 16 rappen (17 cents) per share, which was down from a year ago due to lower net revenues, partially offset by decreased operating expenses.

Net revenues were CHF 5.8 million ($6.0 million), down 13.4% year over year. However, net interest income increased 4.0% year over year to CHF 1.7 million ($1.8 million), driven by lower interest expenses. Additionally, the company's commissions and fees surged 3.2% to CHF 3.2 million ($3.4 million). Moreover, total operating expenses dipped 6.9% to CHF 5.4 million ($5.6 million).

Credit Suisse Group's capital position improved in the quarter. Basel 2.5 Tier 1 ratio came in at 18.5%, up from 14.3% in the prior-year quarter. Moreover, Basel 2.5 Core Tier 1 ratio increased to 14.7% from 10.0% in the prior-year quarter.

Earnings Estimates on an Upswing

Over the last 30 days, the Zacks Consensus Estimate for 2012 rose 4.8% to $2.85 per share, implying 91.5% growth over the prior year. For 2013, the Zacks Consensus Estimate is at $2.90.

Reasonable Valuation

Along with a low P/B multiple, Credit Suisse Group has a forward P/E ratio as low as 7.9. (a P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). Additionally, Credit Suisse Group currently enjoys a dividend yield of 3.6%. Therefore, in addition to being a value stock, the company offers income opportunity.

Chart Shows Strength

Credit Suisse Group has been continuously outperforming its 50-day moving average over the last three months, exhibiting a steady growth trend.

Headquartered in Zurich, Switzerland, Credit Suisse Group AG operates as a financial services company and provides various banking services and products. Founded in 1856, the firm operates in Switzerland, Europe, the Middle East, Africa, the Americas, and the Asia Pacific. The company has market capital of about $30.1 billion. Deutsche Bank AG (DB) is another Zacks #1 Rank (Strong Buy) stock in the same industry.

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