On Apr 1, 2014, we issued an updated research report on Deutsche Bank AG ( DB ). We remain cautious over the company's growth prospects owing to several issues it is currently encountering.
Deutsche Bank's legal hassles have been a drag on its earnings. The mounting litigation costs pushed the company to record net loss of €965 million ($1.3 billion) in fourth-quarter 2013. Recently, a new probe related to bond dealings has been initiated by the Securities and Exchange Commission (SEC), which may further add to its legal woes.
Moreover, volatile market trends, macro economic headwinds and the prevalent stringent regulatory landscape have limited growth for Deutsche Bank. Notably, the company witnessed a year-over-year decline in revenues of 5% in 2013, reversing the past track record of revenue uptick at a CAGR of 19.9% over 5 years (2008-2012).
Weak fundamentals and dismal results at Deutsche Bank triggered a downward revision in the Zacks Consensus Estimate, as analysts turned more bearish on the stock's future performance. This is evident from the movement in the Zacks Consensus Estimate over the past 60 days. For 2014, it decreased 9.4% to $5.60 while it declined 2.2% to $7.47 per share for 2015.
Deutsche Bank currently carries a Zacks Rank #5 (Strong Sell).
Key Picks from the Sector
Some top-ranked stocks in the foreign banks space include Argentina based Banco Macro S.A. ( BMA ), Spanish bank Bankinter, S.A. ( BKNIY ) and France based Credit Agricole S.A. ( CRARY ). All these stocks carry a Zacks Rank #1 (Strong Buy).