NEW YORK (TheStreet) -- Deutsche Bank AG (DB - Get Report) shares are down 1.1% to $44.53 in trading Monday.
The decrease follows a European regulator's proposal that banks need to set aside a certain amount of capital in case of an emergency.
Deutsche Bank is estimated to need to set aside 2.2 billion euros under the proposal.
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Under the European Banking Authority proposal, detailed standards would be would be set on the valuation of banking assets. The proposal would also require a "rainy day" fund of additional capital to absorb unexpected losses.
The move would be in an effort to prevent a repeat of the taxpayer funded bank bailout that occurred in big banks across the continent following the 2009 financial meltdown.
TheStreet Ratings team rates DEUTSCHE BANK AG as a Sell with a ratings score of D+. TheStreet Ratings Team has this to say about their recommendation:
"We rate DEUTSCHE BANK AG (DB) a SELL. This is driven by multiple weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The area that we feel has been the company's primary weakness has been its relatively poor performance when compared with the S&P 500 during the past year."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry, implying reduced upside potential.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Capital Markets industry and the overall market, DEUTSCHE BANK AG's return on equity significantly trails that of both the industry average and the S&P 500.
- DB, with its decline in revenue, underperformed when compared the industry average of 7.7%. Since the same quarter one year prior, revenues fell by 19.3%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- Net operating cash flow has significantly increased by 63.02% to -$4,448.27 million when compared to the same quarter last year. Despite an increase in cash flow of 63.02%, DEUTSCHE BANK AG is still growing at a significantly lower rate than the industry average of 119.00%.
- The gross profit margin for DEUTSCHE BANK AG is currently very high, coming in at 72.98%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -15.42% is in-line with the industry average.
- You can view the full analysis from the report here: DB Ratings Report