The Zacks Analyst Blog Highlights: Royal Bank of Scotland Group, JPMorgan Chase, Citigroup, Goldman Sachs Group and Gap
CHICAGO, Nov. 11, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include the The Royal Bank of Scotland Group plc (NYSE:RBS-Free Report), JPMorgan Chase & Co. (NYSE:JPM-Free Report), Citigroup Inc. (NYSE:C-Free Report), The Goldman Sachs Group Inc. (NYSE:GS-Free Report) and The Gap Inc. (NYSE:GPS-Free Report).
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Here are highlights from Friday's Analyst Blog:
RBS Settles SEC Charges for $154M
On Thursday, The Royal Bank of Scotland Group plc (NYSE:RBS-Free Report) announced a settlement with the Securities and Exchange Commission (SEC) worth about $153.7 million. The settlement includes the resolution of claims relating to misrepresentations of documents while selling mortgage-backed securities (MBS) in 2007.
The lodged complaint indicts RBS of presenting modified documents related to the sale of over $2.2 billion in residential mortgage-backed securities (RMBS).
The SEC accused RBS of issuing misleading statements with omissions related to MBS and concealment of risks associated with these securities. The plaintiff claims that the documents used for offering the securities contained fraudulent statements or omissions regarding the guidelines associated with the properties' value and the borrowers' ability to repay their loans. Misinterpretation of these risks led to the investments, which incurred losses at current levels.
Similar actions have been taken against other banking majors, including JPMorgan Chase & Co. (NYSE:JPM-Free Report), Citigroup Inc. (NYSE:C-Free Report) and The Goldman Sachs Group Inc. (NYSE:GS-Free Report). Notably, Goldman agreed to pay $550 million in Jul 2010, while JPMorgan settled charges by paying $153.6 million in Jun 2011 and a further $296.9 million in Nov 2012 to the SEC. Further, Citigroup has agreed to pay $285 million.
Our Viewpoint
Trouble has been brewing for the banks for quite some time now. A slew of lawsuits have continued for major banks since the financial meltdown. Numerous lawsuits alleging banks of such wrongdoings are expected to tarnish their reputation and financials over time. However, investors and other financial institutions bearing the brunt of these faulty practices are expected to be fairly compensated.
The lawsuit settlement by banks stress on their efforts to resolve all mortgage related issues, and thereby reduce costs over the upcoming period. Moreover, such agreements will likely help revive the economy, and bode well for the company.
RBS currently carries a Zacks Rank #3 (Hold).
Gap Shares Rise on Robust Comps
Shares of The Gap Inc. (NYSE:GPS-Free Report) rose approximately 8% in the extended trading hours on the back of the company's better-than-expected Oct 2013 comparable-store sales (comps) results and impressive earnings guidance for third-quarter fiscal 2013 which is well above the Zacks' expectation.
Gap posted comps increase of 4% for Oct 2013, compared with an equivalent percentage increase for the 4 weeks ended Nov 3, 2012. Brand-wise, the company registered improved comps performance at every brand. Comps performance at Gap Global rose 5% compared with a 3% increase in the prior-year period. Comps at Banana Republic Global inched up 1%, as against a 5% rise recorded last year. Old Navy Global's comps increased 2% versus a 5% increase last year.
Net sales for the four-week period came at $1.29 billion, up from $1.22 billion during the four-week period ended Oct 27, 2012. The improved top-line results came primarily on the back of Gap's strategy of bringing more brightly colored clothing, designer collaborations and livelier stores.
Net sales for the third quarter of fiscal 2013 came in at $3.98 billion, up from $3.86 billion reported in the year-ago comparable quarter. Comps inched up 1% in the quarter versus a 6% increase registered in third-quarter fiscal 2012.
Brand-wise, comps performances at Gap Global were up 1% compared with a 4% increase in the prior-year period. Comps at Banana Republic Global inched down 1% against a 5% rise recorded last year. Old Navy Global's comps were flat versus a 9% increase last year.
Bolstered by better-than-expected October comps performance, Gap expects its earnings for the third quarter to come in the range of 70–71 cents per share, up 11%–13% from the year-ago figure. The earnings guidance is also significantly more than the Zacks Consensus Estimate of 66 cents per share. Gap will release its third-quarter results on Nov 21, 2013.
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