National Bank of Greece (NBG) Stock Falls, Jim Cramer Weighs In

NEW YORK (TheStreet) -- Shares of the National Bank of Greece (NBG) are down by 1.83% to $1.07 on heavy volume in mid-afternoon trading on Wednesday, as the country's central bank has warned for the first time that it may be on a "painful course" to default and an exit from the EU and Eurozone, BBC.com reports.

Debt negotiation talks between Greece and its international creditors have stalled following months of tense discussions. Each side is blaming the other for the failed talks.

TheStreet's Jim Cramer, Portfolio Manager of the Action Alerts PLUS Chartiable Trust Portfolio says: "In the last 48 hours it has become abundantly clear that a deal of some kind may not be reached and that the Greek government is more inclined to roll the dice thinking it could be a win win. If they get the money, it's a win. If they don't, then so what, things are bad anyway. That's changed the equation and made it so that we all have to wait around and see what's going to happen, including the Fed."

The halted progress between the two parties is holding up the release of 7.2 billion euros in bailout funds for Greece, BBC.com noted.

"Failure to reach an agreement would... mark the beginning of a painful course that would lead initially to a Greek default and ultimately to the country's exit from the euro area and, most likely, from the European Union," the Bank of Greece said, according to the BBC.

So far today, 13.09 million shares of National Bank of Greece have exchanged hands as compared to its average daily volume of 10.52 million shares.

"Striking an agreement with our partners is a historical imperative that we cannot afford to ignore," the bank continued.

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 several 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, poor profit margins and weak operating cash flow."

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 168.5% when compared to the same quarter one year ago, falling from $249.36 million to -$170.78 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, NATIONAL BANK OF GREECE's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for NATIONAL BANK OF GREECE is currently lower than what is desirable, coming in at 28.20%. It has decreased significantly from the same period last year. Along with this, the net profit margin of -11.29% is significantly below that of the industry average.
  • Net operating cash flow has significantly decreased to -$385.60 million or 192.98% 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: NBG Ratings Report

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