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TheStreet Open House

How Will Credit Suisse (CS) Stock React To Commodities Trading Decision?

NEW YORK (TheStreet) -- Shares of Credit Suisse Group (CS) are down -2.72% to $28.27 as the firm reversed course and said it will quit commodities trading after posting its biggest loss since the financial crisis in 2008, the result of a $1.78 billion fine from U.S. authorities for helping its clients evade taxes, Reuters reports.

Credit Suisse's fixed income unit beat its wealthy client unit and its U.S. rivals with a 4% jump in sales and trading, overcoming its own downbeat guidance in May, Reuters said.

That compares to declines of at least 10% at U.S. banks like Goldman Sachs (GS) and JPMorgan (JPM) last week.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

TheStreet Ratings team rates CREDIT SUISSE GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:

"We rate CREDIT SUISSE GROUP (CS) a HOLD. The primary factors that have impacted our rating are mixed some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CREDIT SUISSE GROUP's earnings per share declined by 31.3% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, CREDIT SUISSE GROUP increased its bottom line by earning $1.29 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($2.65 versus $1.29).
  • 45.78% is the gross profit margin for CREDIT SUISSE GROUP which we consider to be strong. Regardless of CS's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 9.50% trails the industry average.
  • CS, with its decline in revenue, slightly underperformed the industry average of 0.1%. Since the same quarter one year prior, revenues slightly dropped by 4.1%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • The company's current return on equity has slightly decreased from the same quarter one year prior. This implies a minor weakness in the organization. Compared to other companies in the Capital Markets industry and the overall market on the basis of return on equity, CREDIT SUISSE GROUP underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Capital Markets industry. The net income has significantly decreased by 29.2% when compared to the same quarter one year ago, falling from $1,373.02 million to $971.72 million.
  • You can view the full analysis from the report here: CS Ratings Report

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