CS Fundamental Research Investment Analysis, Credit Suisse Group ADS

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Credit Suisse Group ADS (CS)

The Razor's Edge

2-Year Price History

Recent Price
(2/6/2009)
$28.87
52-Week Price
$18.90 - $57.72
Market Capitalization
$29.6 Billion
Dividend Yield
10.50%
Most Recent Dividend
$1.56

About Credit Suisse Group ADS

Credit Suisse Group ADS is considered to operate in the Financial sector. They specifically operate in the Foreign Money Center Banks business segment contained within the Banking industry.

The Company is a global financial services provider that operates through its three segments: Private Banking, Investment Banking and Asset Management.

A Word Of Caution

Credit Suisse Group ADS (CS) has experienced a very significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company.

Therefore, (and as always), check additional sources and available information regarding CS before making an investment decision.

Ockham's Rating

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CS Revenue

As a value investing shop, we are interested in seeing how CS's revenues measure up against past performances. One easily understandable way of doing that is to compare Price to Sales per share levels over a given time frame. Assuming it is available, Ockham prefers to look at ten years of history (for this stock there are 9 years of history available) and we weigh recent years more heavily. This allows us to find weighted average historical high and low Price to Sales ratios, which give us a better idea of the stock's current underlying value. Using this method, we have established a high range for Price to Sales of 0.75x and the low end of the range at 0.39x.

With respect to these historically rational metrics, notice that the current Price to Sales per share ratio for CS of 0.87x is well above its historical average. This means that CS looks relatively expensive compared to its historical Price to Sales average, and thus it is more difficult to believe that there is significant price appreciation potential. In order for the stock to become more attractive, we would like to see a decline in the Price to Sales ratio of 53% just to return CS to its historical average.

CS Cash Earnings

Price to Cash Earnings analysis is inappropriate for this company due to anticipated negative cash flows for this year. Rather than calculating a potentially misleading Price to Cash Earnings analysis, we have chosen to give CS a neutral Price to Cash Earnings outlook at this time. However, we should point out that this metric is a significant element in Ockham’s methodology to analyzing the outlook for any company. Therefore, for CS, our assessment is now more dependent on the Price to Sales analysis, and investors should be cautious with a company with very limited, if any, positive cash earnings.

CS Dividends

While it is not necessary to pay an attractive dividend or a dividend at all, to receive a positive rating from Ockham, we view dividends as an additionally helpful measure in determining the future potential of any company.

In CS’s case, the estimated annual dividend is $3.04 resulting in a current dividend yield of 10.53%. Similar to our review of Sales and Cash Earnings per share, we evaluate dividend yields from CS against the historic high and low levels over the past 9 years. The highest dividend yield from CS over this period was 16.08% while the lowest dividend yield was 0.00% CS’s current dividend yield is therefore significantly higher than its median dividend yield historically. In fact, the current yield is 30.97% above the median which weighs very positively on our analysis of CS.

Peer Comparison

:

Credit Suisse Group ADS Industry Grouping

(2/6/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding CS) 16.53 6.72 » 53.85 1.18 0.94 » 4.00 15.00% 18.63%
*10 year range does not include current year values
The Bank of New York Mellon Corp. BK $32.6 Billion $28.41 6.06 4.78 » 37.50 1.95 1.52 » 5.93 20.76% 15.72%
Bank of America Corp. BAC $30.8 Billion $6.13 1.91 4.74 » 21.33 0.32 0.58 » 2.94 20.79% 15.92%
Credit Suisse Group ADS CS $29.6 Billion $28.87 -1.00 5.61 » 54.10 0.87 0.22 » 2.08 4.13% 14.78%
US Bancorp USB $28.4 Billion $16.19 6.40 7.23 » 29.94 1.71 1.16 » 4.77 5.66% 21.62%
Mizuho Financial Group, Inc.-Sp ADR Shs Sponsr Amern Deps Recp 2 Sh MFG $28.1 Billion $5.04 63.00 8.62 » 150.00 0.70 0.49 » 3.55 n/a 22.07%
Toronto Dominion Bank TD $26.4 Billion $32.58 5.27 8.24 » 30.50 1.22 0.95 » 2.82 12.81% 17.82%
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RazorWire™ & Community Discussion

Fast Money
2/9/2009 5:06 PM
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Fast Money
2/6/2009 5:25 PM
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2/5/2009 3:26 PM
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2/3/2009 2:39 PM
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2/3/2009 2:38 PM
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2/3/2009 10:48 AM
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2/3/2009 10:16 AM
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2/3/2009 9:03 AM
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2/2/2009 4:26 PM
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2/2/2009 3:52 PM
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2/2/2009 9:16 AM
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Closing Bell
1/29/2009 3:25 PM
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Squawk On The Street
1/29/2009 9:33 AM
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America's Nightly Scoreboard
1/27/2009 7:15 PM
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Mad Money
1/21/2009 6:02 PM
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Key Fundamentals

CS - Credit Suisse Group ADS Fundamentals
Price (2/6/2009) $28.87
Volume (2/6/2009) 2.3 Million
10 Day Average Volume 1.2 Million
13 Week Price Range $18.90 - $33.19
52 Week Price Range $18.90 - $57.72
LTM Revenue $69.0 Billion
 
Shares Outstanding (12/2007) 1.0 Billion
Market Capitalization $29.6 Billion
Shares Held By Institutions 60.7 Million
Institutional Holders 184
% Shares Held By Institutions 5.40%
Earnings Per Share (EPS) $6.14
P/E Ratio 47.30
Book Value Per Share $35.29
 
Gross Margin n/a%
Quarterly Dividend 3.04
Dividend Yield 10.50%
Beta 1.40
Fiscal Year Ends December