Unkind Margin And Cost Might Upset Deutsche Bank (DB) Stock

On May 17, we issued an updated research report on Deutsche Bank AG (DE:DBKGn) (NYSE:DB) . In addition to margin pressure, the company is witnessing increasing expenses due to several legal matters. However, its initiatives to improve performance through greater digitization and divesture of unprofitable business might offset the negatives to some extent.

Shares of Deutsche Bank have increased 16.4% in the last six months, outpacing the 14.0% growth for the Zacks categorized Banks - Foreign industry.

However, the company’s Zacks Consensus Estimate for the current year has been revised 2.3% downward, over the past 60 days. As a result, it currently carries a Zacks Rank #5 (Strong Sell).

The bank has significant involvement in legal matters, of which some cases have been settled. However, this is likely to keep expenses on the higher side in near term. Further, in order to settle a pending case over its sale of toxic mortgage securities, it signed a $7.2 billion agreement with the U.S. Department of Justice, which made a considerable impact on its financials.

Moreover, Deutsche Bank continues to face margin pressure due to a low interest rate environment in the European economy.

However, the bank has taken steps to reduce expenses, which was reflected in its first-quarter 2017 results. Also, it reported net profit this quarter as against losses over the last few quarters.

Some better-ranked stocks in the financial space include Comerica Incorporated (NYSE:CMA) , The PNC Financial Services Group, Inc. (NYSE:PNC) and Northern Trust Corp. (NASDAQ:NTRS) . Allthe stocks hold a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank(Strong Buy) stocks here.

Comerica‘s earnings estimates were revised 8.4% upward for the current year, in the past 30 days. Also, its share price jumped 11.1%, over the last six months.

PNC Financial’s current-year earnings estimates were revised 1.4% upward, over the last 30 days. Further, its shares increased 6%, in the last six months.

Northern Trust witnessed a1.1% upward earnings estimates revision for the current year, in the past 30 days. Moreover, its shares gained 5.2%, in the last six months.

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