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Deutsche Bank’s Shares Sink after It Reports 2015 Losses

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Shares of Deutsche Bank sink on disappointing earnings

Deutsche Bank reported its 4Q15 earnings on January 28, 2016. It reported losses of 2.1 billion euros for the quarter and 6.8 billion euros for 2015. Investors were disappointed, and the stock fell 2.6% following the earnings release.

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Year-to-date, shares of the company have plunged 26%. Overall, US banks have been underperforming Eurozone banks (EUFN). During 2016 so far, the iShares MSCI Europe Financials ETF, which invests in a portfolio of European banks, has fallen 11.3%. In comparison, the S&P KBW Banks ETF (KBE) has fallen 12.3%.

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Analysts’ price target and ratings

With an average consensus price target of 25.47 euros and a median target estimate of 26.17 euros, DB is still trading at a discount of 32% to analysts’ expectations. Among the 38 analysts following the stock, only 11 are upbeat about it and think it should be bought at its current levels. Shares of Deutsche Bank have received six “sell” ratings and have been assigned 21 “hold” ratings.

Despite its disappointing earnings, some brokerage houses are bullish on the stock, given that DB plans to overhaul its operations. However, going forward, we may see some of its “buy” ratings converted to “holds.”

Note that Deutsch Bank’s estimated earnings per share (or EPS) have been revised downward in one instance by research brokerages in the past four weeks.

Valuations

Deutsche Bank is trading at a price-to-earnings multiple of 6.1x. Its large-cap peers UBS (UBS), Credit Suisse (CS), and Barclays (BCS) are trading at price-to-earnings multiples of 10.8x, 9.3x, and 7.1x, respectively.

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