Why National Bank of Greece (NBG) Stock Is Falling Today

NEW YORK (TheStreet) -- National Bank of Greece NBG was falling 11.9% to $4.61 Monday following a Reuters report that the bank is going ahead with a public offering in order to raise capital.

The bank reportedly picked Goldman Sachs GS and Morgan Stanley MS to help coordinate an offering to plug its 2.18 billion euro shortfall. The board will discuss a plan which will raise up to 2.5 billion euros according to one unnamed source.

The offering likely won't include pre-emption rights for current shareholders.

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TheStreet Ratings team rates NATIONAL BANK OF GREECE as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:

"We rate NATIONAL BANK OF GREECE (NBG) 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 company's weaknesses can be seen in multiple areas, such as its generally disappointing historical performance in the stock itself and feeble growth in its earnings per share."

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

  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 28.82%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 87.77% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
  • NATIONAL BANK OF GREECE has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, NATIONAL BANK OF GREECE turned its bottom line around by earning $1.98 versus -$27.80 in the prior year. For the next year, the market is expecting a contraction of 92.4% in earnings ($0.15 versus $1.98).
  • NBG, with its decline in revenue, slightly underperformed the industry average of 12.1%. Since the same quarter one year prior, revenues fell by 16.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • Net operating cash flow has significantly increased by 95.36% to -$61.40 million when compared to the same quarter last year. Despite an increase in cash flow of 95.36%, NATIONAL BANK OF GREECE is still growing at a significantly lower rate than the industry average of 385.82%.
  • 46.25% is the gross profit margin for NATIONAL BANK OF GREECE which we consider to be strong. Regardless of NBG's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, NBG's net profit margin of 39.31% significantly outperformed against the industry.
  • You can view the full analysis from the report here: NBG Ratings Report

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Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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