Why Credit Suisse (CS) Stock Is Lower This Morning

NEW YORK (TheStreet) -- Shares of Credit Suisse Group  (CS) are down -2.08% to $29.70 in pre-market trade as the New York State Department of Financial Services seeks hundreds of millions of dollars from the Swiss bank in its investigation of potential tax evasion involving the firm, sources say, which could push an eventual settlement with U.S. authorities to more than $2 billion, Reuters reports.

The settlement with New York State would be in addition to the fine that the firm is discussing with the Justice Department which could be near $1.6 billion, Reuters said.

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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. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, expanding profit margins and notable return on equity. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow."

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

  • CREDIT SUISSE GROUP 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. 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 $1.30 versus $0.89 in the prior year. This year, the market expects an improvement in earnings ($3.53 versus $1.30).
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 5.1%. Since the same quarter one year prior, revenues slightly dropped by 3.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • 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 253.0% when compared to the same quarter one year ago, falling from $318.19 million to -$486.90 million.
  • Net operating cash flow has significantly decreased to -$3,698.89 million or 118.25% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
  • You can view the full analysis from the report here: CS Ratings Report

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