On Jun 6, Zacks Investment Research upgraded
The Royal Bank of Scotland Group plc
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
The rank upgrade of this U.K.-based bank was driven by strong
estimate revisions on the back of impressive first-quarter 2014
On May 3, Royal Bank of Scotland declared its first-quarter 2014
results. Profit from continuing operations came in at £1.28 billion
($2.12 billion), rising more than twofold from £476 million ($739.4
million) in the prior-year quarter.
Results benefited from lower loan impairment losses, reduced
operating expenses and higher net interest income. However, reduced
non-interest income was the downside.
Further, management anticipates a modest increase in the net
interest margin in the upcoming quarters given the ongoing economic
recovery in the U.K.
Margins are expected to be slightly up and strategic initiatives to
result in cost reductions and improve efficiency in 2014. While
full implementation of these actions will take two to three years,
management anticipates the underlying cost base to be lower by £1
billion in 2014.
Given the strong first-quarter results as well as the outlook for
2014, analysts' bullish stance is reflected in the stock. The Zacks
Consensus Estimate for 2014 advanced significantly from 27 cents
per share 30 days ago to 61 cents today. Also, for 2015, it
moved north 25.0% to 65 cents per share.
Other Stocks to Consider
Other stocks in the foreign banks space worth considering include
Australia & New Zealand Banking Group Ltd.
BBVA Banco Franc
) and Spain's
). All three stocks hold the same rank as Royal Bank of
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