National Bank of Greece (NBG) Stock Advancing on Debt Draft Speculation

NEW YORK (TheStreet) --Shares of the National Bank of Greece (NBG) are higher by 7.60% to $1.35 in late morning trading on Wednesday, following reports suggesting the debt riddled country has started drafting an agreement with its creditors.

Greece, which is expected to run out of money next month, and its creditors are said to have begun drafting a technical-level agreement, Reuters reports.

"At the Brussels Group (of credit negotiators) today procedures to draw up a staff-level agreement are beginning," a government aid told Reuters, adding that the deal would not cut wages and pensions and includes reform of value added taxes and a lower target for a primary surplus in the first year.

Athens has been holding negotiations with Eurozone and IMF officials in Brussels for several weeks with no deal reached as creditors have been unsatisfied with the promises regarding economic reforms Greece has been making, The Wall Street Journal reports.

Greece has a 300 million euro payment due to the International Monetary Fund on June 5, with additional payments due later in the month.

Earlier in the week, the Greek government said it would try and make the payment, despite statements made openly by members of Prime Minister Alexis Tsipras's government saying Greece doesn't have the money, Reuters reported.

Separately, 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 a few notable 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 feeble growth in its earnings per share, deteriorating net income, disappointing return on equity and generally disappointing historical performance in the stock itself."

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

  • 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. The company has suffered a declining pattern earnings per share over the past two years. During the past fiscal year, NATIONAL BANK OF GREECE reported lower earnings of $0.15 versus $1.98 in the prior year.
  • 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 Commercial Banks industry. The net income has significantly decreased by 284.9% when compared to the same quarter one year ago, falling from $760.10 million to -$1,405.19 million.
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Commercial Banks industry and the overall market on the basis of return on equity, NATIONAL BANK OF GREECE underperformed against that of the industry average and is significantly less than that of the S&P 500.
  • Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 54.52%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 190.90% 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.
  • NBG, with its decline in revenue, underperformed when compared the industry average of 0.3%. Since the same quarter one year prior, revenues fell by 23.5%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • You can view the full analysis from the report here: NBG Ratings Report

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