Why UBS (UBS) Stock Is Up In Pre-Market Trading Tuesday

NEW YORK (TheStreet) -- Shares of the Swiss bank UBS AG (UBS) are up 1.82% to $21.22 in pre-market trading on Tuesday after the company reported that its profit for the 2014 first quarter beat forecasts.

UBS reported net profit was 1.1 billion Swiss francs, or $1.25 billion, compared with 988 million francs from the same period last year, exceeding analyst forecasts of 838 million francs.

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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 impressive record of earnings per share growth, compelling growth in net income and good cash flow from operations. However, as a counter to these strengths, we find that the company's profit margins have been poor overall."

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

  • UBS AG reported significant earnings per share improvement 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 ($1.20 versus $0.93).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 151.0% when compared to the same quarter one year prior, rising from -$2,096.14 million to $1,068.25 million.
  • Compared to where it was a year ago today, the stock is now trading at a higher level, reflecting both the market's overall trend during that period and the fact that the company's earnings growth has been robust. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • 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.
  • The gross profit margin for UBS AG is currently lower than what is desirable, coming in at 28.55%. Despite the low profit margin, it has increased significantly from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 11.53% trails the industry average.
  • You can view the full analysis from the report here: UBS Ratings Report
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