LONDON (The Deal) -- Europe's markets turned sharply lower on Friday, hit by fears of a sooner-than-expected rise in U.S. interest rates as well as worries over the effect of stepped-up sanctions against Russia, which came into force this morning. There was also a swath of disappointing manufacturing figures from both inside and outside the eurozone.
Markit's Eurozone purchasing managers index for the manufacturing sector came in at 51.8 for July, unchanged from June and slightly below expectations. But there was particular attention on France, which came in at 47.8 -- a seven-month low -- and Greece, which reversed June's positive outcome to hit a nine month low at 48.7. Any number under 50 represents a decline in output.
Even in the U.K., which has been outperforming the eurozone, manufacturing growth was slower than expected, falling from 57.5 to 55.4 on the Market/CIPS survey. The markets will also be watching U.S. non-farm payroll figures this afternoon.
TheStreet Ratings team rates ROYAL BANK OF SCOTLAND GROUP as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate ROYAL BANK OF SCOTLAND GROUP (RBS) 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 revenue growth, increase in net income and expanding profit margins. However, as a counter to these strengths, we find that the company's return on equity has been disappointing."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- RBS's revenue growth has slightly outpaced the industry average of 4.6%. Since the same quarter one year prior, revenues slightly increased by 0.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Commercial Banks industry. The net income increased by 194.1% when compared to the same quarter one year prior, rising from $720.15 million to $2,117.73 million.
- 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. 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.
- ROYAL BANK OF SCOTLAND GROUP reported significant earnings per share improvement 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, ROYAL BANK OF SCOTLAND GROUP reported poor results of -$2.68 versus -$1.72 in the prior year. This year, the market expects an improvement in earnings ($56.04 versus -$2.68).
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Commercial Banks industry and the overall market, ROYAL BANK OF SCOTLAND GROUP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: RBS Ratings Report
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