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The Zacks Analyst Blog Highlights: Wells Fargo, Royal Bank of Scotland, and Wal-Mart Stores

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For Immediate Release

Chicago, IL – October 12, 2016 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Wells Fargo (NYSE:(WFC - Free Report) -Free Report),Royal Bank of Scotland (NYSE:(RBS - Free Report) -Free Report), Inc. (NASDAQ:(AMZN - Free Report) -Free Report) and Wal-Mart Stores Inc. (NYSE:(WMT - Free Report) -Free Report).

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

Here are highlights from Tuesday’s Analyst Blog:

Why Royal Bank of Scotland’s (RBS - Free Report) Scandal Is Much Worse Than Wells Fargo (WFC - Free Report)

Let’s make one thing clear: Wells Fargo’s (NYSE:(WFC - Free Report) -Free Report) fraudulent account-opening scandal was bad. The company’s response, including its CEO’s apathetic testimony in front of Congress, was nothing short of a national embarrassment.

Would you believe me if I said that the Wells Fargo scandal pales in comparison to the shocking story developing around the Royal Bank of Scotland (NYSE:(RBS - Free Report) -Free Report)?

You better.

According to a set of leaked files uncovered in a recent Buzzfeed report, RBS staffers were allegedly instructed to knowingly steer healthy businesses towards the bank’s troubled-business unit, the Global Restructuring Group (GRG).

The GRG profited on these businesses by deliberately hitting them with massive fees and interest-rate hikes, before scooping up their assets at fire-sale prices.

And unlike the Wells Fargo scandal, the available evidence suggests that this was a top-to-bottom scheme.

“RBS managers encouraged employees to hunt for ways to boost their bonuses by forcing customers into loan restructuring in order to extract heavy fees as part of a profit drive nicknamed ‘Project Dash for Cash,’” the Buzzfeed News report says.

Through a series of leaked internal emails and documents, the Buzzfeed report revealed this detail and many more, including information on firms that never missed a loan payment being pushed into the GRG; the bank’s property division being passed details that were not available to other bidders when it wanted to acquire assets from GRG businesses; and staff being told to conceal conflicts of interest from customers.

In short, the company documents appear to show that RBS staff at nearly every level were privy to the business-crushing techniques the company employed to force small businesses to the GRG. The files also reveal that 16,000 firms were pushed into the restructuring unit following the financial crash. This includes care homes, farms, and children’s centers.

The Buzzfeed leaks even include executives sending managers “target lists” of loans secured against properties to be used to find potential clients to force into costlier loans.

The BBC spoke to Andi Gibbs, a British architect that was caught up in the GRG scheme. Gibbs claims that RBS told him moving to the restructuring unit would “effectively create financial security.”

“What I’ve always held on to is that I know what I’m doing,” said a teary-eyed Gibbs. “The bank actually secured the failure of this business just by the failure of their actions, absolutely.”

So, what’s the worst part about all of this? The Royal Bank of Scotland is 73% taxpayer-owned. After the financial disaster of 2008, the UK government set up a holding company that bailed out the bank and still holds a majority of the company.

Yes, the Wells Fargo scandal was bad.

But just across the pond, a government-owned bank appears to have deliberately run small businesses into the ground in an effort to turn a profit. Now that’s definitely not good.

Amazon to Open Convenience Stores as Grocery Business Expands

Watch out 7/11: e-commerce giant Inc. (NASDAQ:(AMZN - Free Report) -Free Report) is opening a new line of convenience stores as part of its grocery business expansion, according to the Wall Street Journal . The stores will be available to Amazon Fresh subscribers, Amazon’s online grocery delivery and ordering service.

The convenience stores will sell milk, produce, and meats, and other perishable items, as well as drive-up destinations where subscribers can pick up their orders and have them brought to their cars. The WSJ notes, citing people familiar with the matter, that customers will also be able to order goods with a longer shelf life like peanut butter and cereal using a touch screen or tablet for same-day delivery.

Amazon’s initiative comes soon after chief rival Wal-Mart Stores Inc. (NYSE:(WMT - Free Report) -Free Report) echoed previous statements about its commitment to its own online grocery business. “When Wal-Mart's online sales growth picked up in the fiscal second quarter, growing roughly 12 percent, management attributed part of the acceleration to this service,” writes CNBC .

Even though digital grocery sales have been slow to take off in general, they now account for roughly 2% of total grocery sales in the U.S., according to IBISWorld. A bustling online grocery business could be a huge opportunity for Amazon, especially as consumers grow more accustomed to picking their groceries out online and having them delivered to their doorstop. However, companies like Amazon and Walmart will need to figure out how to handle perishable inventory, as well as managing refrigerated warehouses.

Amazon Fresh costs $15 per month—in addition to the flat $99 per year Amazon charges for Prime—and is only available in California, New Jersey, New York City, Philadelphia, Boston, Washington, among others. Amazon first launched grocery delivery back in 2007 in Seattle.

Amazon’s interest in brick-and-mortar stores is beginning to pick up in haste. The company recently opened a full-fledged bookstore in Seattle, along with 25 pop-up locations in the U.S.

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RBS currently has a Zacks Rank #2 (Buy) but this ranking is based solely on earnings estimate revisions. The impact from the Buzzfeed leaks remains uncertain, and it has yet to lead to analysts slashing their outlook for RBS stock. Be on the lookout for that in the future, but in the meantime, note that RBS has a weak fundamental position already, including an overall grade of ‘D’.

Today, Zacks is promoting its ''Buy'' stock recommendations. Get #1Stock of the Day pick for free.

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