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1-Star Stocks Doomed to Drop: Credit Suisse

By Brian D. Pacampara, CFA - Updated Apr 5, 2017 at 8:05PM

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Market-lagging returns could be written in this 1-star.

Based on the aggregated intelligence of 120,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, Swiss banking giant Credit Suisse Group (NYSE:CS) has received the dreaded one-star ranking. Our data has shown that one-star stocks woefully lag the market average; conversely, five-star stocks outperform the S&P by a significant margin.

With that in mind, let's take a closer look at Credit Suisse's business and see what CAPS investors are saying about the stock right now.

Credit Suisse facts

Headquarters (founded)

Zurich, Switzerland (1856)

Market Cap

$26.53 billion

Industry

Foreign Money Center Banks

TTM Revenue

$18.05 billion

Management

CEO Brady Dougan

CFO Renato Fassbind

Return on Equity (average last five years and TTM)

12.9% and (4.1%)

Competitors

UBS (NYSE:UBS),

Deutsche Bank (NYSE:DB)

CAPS members bearish on CS also bearish on

Bank of America (NYSE:BAC),

General Electric (NYSE:GE)

CAPS members bullish on CS also bullish on

Wachovia (NYSE:WB),

Citigroup (NYSE:C)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 216 of the 446 members who have rated Credit Suisse -- some 48% -- believe the stock will underperform the S&P 500 going forward. These Fools include CAPS All-Star cashsage and DistressedCaps.

Last month, cashsage noted that Credit Suisse, due to liquidity issues, is trying "to sell all or part of its asset management division. 2008 earnings estimates just turned negative, as per Thomson data. 2009 earnings estimates are slashed recently."

In a pitch just four days later, DistressedCaps shares that bearish outlook, writing:

Yes, [Credit Suisse] operates in a lovely, stable country and its name sounds elegant ... but that won't do it any good in trying to find vital credit sources to keep it operating despite a balance sheet that induces investment panic. In order to stay afloat, it will probably need to sell off some of its best operations -- and what will remain might not keep it breathing. At best, expect more of the slashed earnings expectations and a long and scary road ahead before this one sees any return to economic soundness.

What do you think about Credit Suisse, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 120,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Bank of America is a Motley Fool Income Investor pick. The Fool's disclosure policy always gets a perfect score.

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Stocks Mentioned

Credit Suisse Group AG Stock Quote
Credit Suisse Group AG
CS
$5.71 (4.68%) $0.26
Citigroup Inc. Stock Quote
Citigroup Inc.
C
$53.98 (3.63%) $1.89
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$35.22 (3.82%) $1.29
General Electric Company Stock Quote
General Electric Company
GE
$77.22 (3.06%) $2.29
Deutsche Bank Stock Quote
Deutsche Bank
DB
$9.15 (2.75%) $0.24
UBS Group AG Stock Quote
UBS Group AG
UBS
$16.81 (3.07%) $0.50

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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