Why Deutsche Bank Is Down 40% and Trading below Its Book Value


Jun. 11 2016, Updated 1:04 a.m. ET

Stock performance

Deutsche Bank (DB) closed at $18.13 on the New York Stock Exchange on May 27 and at 16.39 euros in Germany. Shares have fallen ~40% in the last year and are down 26% in 2016 so far. In comparison, peers UBS, Credit Suisse (CS), and Barclays (BCS) have lost 22%, 35%, and 17%, respectively.

[marketrealist-chart id=1344532]

CEO John Cryan has been under significant pressure to cut expenses, strengthen capital, and drive value for shareholders after the bank became the worst-valued stock among global banks like UBS, Credit Suisse (CS), Goldman Sachs (GS), and J.P. Morgan (JPM).

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On May 27, Deutsche Bank was trading at a one-year forward price-to-earnings multiple of 22.4x versus a sector average of 12.1x. Its peers Barclays, Credit Suisse, and UBS trade at PE multiples of 13.6x, 22.2x, and 12.5x, respectively.

For exposure to Deutsche Bank, you could consider the iShares U.S. Preferred Stock ETF (PFF) or the Vanguard FTSE All-World ex-US ETF (VEU). Deutsche Bank is 0.86% and 0.10% of PFF and VEU, respectively.


As of May 27, Deutsche Bank was trading at 0.37 times its book value. Peers RBS, Credit Suisse, and Barclays have price-to-book multiples of 0.55x, 0.63x, and 0.56x, respectively.


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