Stock To Watch: Royal Bank Of Scotland Group (The (RBS) In Perilous Reversal

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.

Trade-Ideas LLC identified Royal Bank of Scotland Group (The ( RBS) as a "perilous reversal" (up big yesterday but down big today) candidate. In addition to specific proprietary factors, Trade-Ideas identified Royal Bank of Scotland Group (The as such a stock due to the following factors:

  • RBS has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $17.1 million.
  • RBS has traded 125,174 shares today.
  • RBS is down 3.5% today.
  • RBS was up 10.7% yesterday.

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More details on RBS:

The Royal Bank of Scotland Group plc, through its subsidiaries, provides banking and financial products and services to personal, commercial, corporate, and institutional customers worldwide. Currently there is 1 analyst that rates Royal Bank of Scotland Group (The a buy, 1 analyst rates it a sell, and none rate it a hold.

The average volume for Royal Bank of Scotland Group (The has been 711,200 shares per day over the past 30 days. Royal Bank of Scotland Group (The has a market cap of $62.9 billion and is part of the financial sector and banking industry. Shares are down 1.3% year-to-date as of the close of trading on Thursday.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Royal Bank of Scotland Group (The as a hold. 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 ratings report include:
  • 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.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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