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Will UBS (UBS) Stock Be Affected By France Tax Evasion Investigation?

Stocks in this article: UBS

NEW YORK (TheStreet) -- UBS (UBS) was placed under formal investigation by the French authorities and ordered to post bail of more than $1 billion in the kind of tax-evasion case that ensnared it in the U.S. several years ago, the New York Times reports.

The Zurich-based bank faces charges of money laundering and tax fraud for helping French clients hide funds from the national tax administration from 2004 to 2012, an official in the Paris prosecutor's office said.

UBS has also been ordered to post bail of 1.1 billion euros, about $1.5 billion, the official said, the Times noted.

Must Read: Warren Buffett's 25 Favorite Growth Stocks

 

The news was first reported Wednesday by Agence France-Presse.

Shares of UBS are up 1.64% to $18.54 in pre-market trade.

TheStreet Ratings team rates UBS AG as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

"We rate UBS AG (UBS) 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. The company's strengths can be seen in multiple areas, such as its growth in earnings per share, increase in net income and reasonable valuation levels. However, as a counter to these strengths, we find that the stock has experienced 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:

  • UBS AG has improved earnings per share by 14.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. This trend suggests that the performance of the business is improving. During the past fiscal year, UBS AG turned its bottom line around by earning $0.93 versus -$0.73 in the prior year. This year, the market expects an improvement in earnings ($1.16 versus $0.93).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Capital Markets industry average. The net income increased by 14.5% when compared to the same quarter one year prior, going from $1,041.10 million to $1,192.31 million.
  • 38.50% is the gross profit margin for UBS AG which we consider to be strong. Regardless of UBS'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 11.95% trails the industry average.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. When compared to other companies in the Capital Markets industry and the overall market, UBS AG's return on equity is below that of both the industry average and the S&P 500.
  • In its most recent trading session, UBS has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.You can view the full analysis from the report here: UBS Ratings Report

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