Long-established in the Banks industry, UBS Group AG (UBS, Financial) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 3.31%, juxtaposed with a three-month change of 21.68%. Fresh insights from the GF Score hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of UBS Group AG.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- Financial strength rank: 2/10
- Profitability rank: 6/10
- Growth rank: 6/10
- GF Value rank: 3/10
- Momentum rank: 6/10
Based on the above method, GuruFocus assigned UBS Group AG the GF Score of 69 out of 100, which signals poor future outperformance potential.
UBS Group AG: A Snapshot of Its Business
With a market cap of $78.72 billion and sales of $34.11 billion, UBS Group AG is a global wealth management business focusing on high and ultra-high-net-worth individuals. It also operates as a conventional retail and commercial bank in its Swiss home market. Its investment bank and asset management businesses support its wealth management operations, but also leverage its strength in wealth management to serve third-party clients.
Financial Strength Breakdown
UBS Group AG's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.72 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 4.25, which is worse than 95.86% of 1328 companies in the Banks industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations. Additionally, the company's debt-to-Ebitda ratio is 9999, which is above Joel Tillinghast's warning level of 4 and is worse than 0% of 30 companies in the Banks industry. Tillinghast said in his book “Big Money Think's Small: Biases, Blind Spots, and Smarter Investing” that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential underperformance. While UBS Group AG has a rich history and a strong presence in the banking industry, its current financial indicators suggest that it may struggle to maintain its past performance. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
