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Don’t Overlook Undervalued Banking Giant UBS Stock


  • UBS Group (NYSE:UBS) has a solid earnings track record and offers an attractive value-and-dividend combo.
  • Furthermore, UBS Group’s acquisition of Credit Suisse (CS) should be fairly problem-free.
  • Investors can get exposure to a Swiss financial giant by purchasing UBS stock today.
UBS stock - Don’t Overlook Undervalued Banking Giant UBS Stock

Source: shutterstock.com/Judith Linine

Have you ever thought about investing in a Swiss bank? It’s actually not a bad idea, especially if we’re talking about UBS Group (NYSE:UBS). First of all, UBS stock is trading at a reasonable valuation. Plus, UBS Group’s takeover of Credit Suisse (NYSE:CS) shouldn’t be as troublesome as some fearmongers would have you believe.

Banking-sector contagion isn’t limited to any single nation or continent. UBS Group’s “shotgun wedding” merger with Credit Suisse demonstrated that a crisis could strike practically anywhere, anytime.

Some people are unhappy with UBS Group’s takeover of Credit Suisse, perhaps because it will create a financial sector giant. Even if they’re not pleased with the outcome, however, the acquisition is still likely to take place. So, why not wager on a power player that happens to be trading at a fair price right now?

What’s Happening With UBS Stock?

CS stock was hammered after UBS Group announced its planned buyout of Credit Suisse for $3.2 billion. Reportedly, the deal will create a bank with “assets double the size of” Switzerland’s “annual economic output.”

Meanwhile, UBS stock has dup relatively well, considering there’s a multinational banking crisis in progress. If you choose to purchase some shares now, you’ll have access to UBS Group forward annual dividend yield of 1.32%.

Additionally, you’ll get a decent value with UBS stock. As it turns out, UBS Group’s GAAP trailing-12-month price-to-earnings (P/E) ratio of 9.2x is below the sector median of 9.44x. Also, the company’s trailing 12-month price-to-book (P/B), price-to-sales (P/S) and price-to-cash-flow (P/CF) ratios are all lower than the respective sector medians.

And by the way, UBS Group has beaten Wall Street’s EPS forecasts during the past four quarters. So far, the company looks like a winner for growth, value and dividend investors.

Don’t Worry About UBS Group’s Merger With Credit Suisse

I’ve already mentioned that UBS Group’s merger with Credit Suisse will create a financial giant. Will the deal actually go through despite some people’s opposition, though?

Bank of America analyst Alastair Ryan doesn’t seem to be losing sleep about it. He recently upgraded UBS stock from “neutral” to “buy,” lifting his price target on the shares from $22.65 to $24.81. The analyst’s commentary about the merger was definitely upbeat:

“We think the objective of this transaction, while solving CS’ situation & associated risks for the system, is to reach a win/win, where UBS shareholders also get value out of this deal over time.”

Ryan’s optimism seems to be justified. Reportedly, the Bank of England has approved UBS Group’s takeover of Credit Suisse in the United Kingdom. Moreover, European Union antitrust regulators gave UBS Group a temporary green light (pending a review) to complete the Credit Suisse acquisition.

On top of all that, Swiss Finance Minister Karin Keller-Sutter declared that she doesn’t “see any stumbling blocks at the moment” concerning the merger between UBS Group and Credit Suisse.

What You Can Do Now

Even if some people are opposed to UBS Group forming a banking leviathan with Credit Suisse, let’s be honest here. The merger will probably go through whether the critics want it to or not.

So, as an investor, there’s really no need to worry about that. In addition, UBS Group has a strong quarterly earnings track record. It’s also worth noting that UBS Group offers an enticing combination of value and yield. All in all, the bull case for UBS stock is super strong and you should think about buying some shares today.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/look-beyond-the-risks-and-buy-ubs-stock/.

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