NBG:Ford Equity Research: STRONG BUY,Reiteration 7/08/11
Report Date: July 08, 2011
National Bank of Greece S.A.
NYSE: NBG
Price as of 07/08/2011
$1.30
Copyright ©2011 Ford Equity Research www.fordequity.com
STRONG BUY
Reiteration 7/08/11
We project that NBG will strongly outperform the market over the next 6 to 12 months. This
projection is based on our analysis of three key factors that influence common stock performance:
earnings strength, relative valuation, and recent price movement.
Previous Rating
Hold (5/23/10 - 11/26/10)
52-Week Price Range
$1.21 - $2.85
Market Capitalization
$6.21 Billions
Annual Dividend Yield
14.6%
Annual Dividend Rate
$0.19
Industry
Banks
Earnings Strength POSITIVE
very negative neutral very positive
EPS increased from $0.27 to an estimated $0.61 over
the past 5 quarters indicating an improving growth
rate. Analyst forecasts have recently been raised.
Relative Valuation VERY POSITIVE
very negative neutral very positive
Operating Earnings Yield of 46.9% ranks above 100%
of the companies covered by Ford.
Price Movement NEGATIVE
very negative neutral very positive
1-year price down 39.2%: VERY NEGATIVE
1-quarter down 27.8%: VERY POSITIVE
1-month down 1.5%: VERY POSITIVE
National Bank of Greece provides a range of financial services, including commercial and retail banking services (including mortgage lending),
investment banking, capital markets, venture capital and advisory services, asset management and insurance. The company is also engaged in
other businesses, including the hotel business, property management and real estate business and information and technology consulting. In
addition to its operations in Greece, the company operated in Turkey and in South Eastern Europe, where it maintains operations in Bulgaria, Serbia,
Romania, Albania, Cyprus and .the Former Yugoslav Republic of Macedonia.
Banks performance is NEGATIVE
Peer Group Comparsion
Overall Quality Recent Market EPS P/E P/B 1 year
Ticker Company Name Rating Rating Price Cap(B) (ttm) (mrq) (ttm) Price Change
NBG National Bank of Gree.. Strong Buy Average $1.30 $6.21 $0.50 2.60 0.55 -39.20
KB KB Financial Group, Inc. Buy Good $50.50 $19.508 $2.09 24.16 1.21 24.00
SHG Shinhan Financial Grou.. Buy Good $96.00 $22.762 $9.28 10.34 1.09 22.30
WF Woori Finance Holding.. Hold Good $39.94 $10.732 $4.36 9.16 0.80 10.90
$1.69
$1.30
NBG Price Performance
Trailing 10 Months
Average Price
Fiscal Year End - DEC 2006 2007 2008 2009 2010 TTM
Annual Operating
Earnings per Share ($)
0.68 0.94 0.92 0.65 0.39 0.50
Annual Revenue ($M)
5878 11714 11659 12472 9360 11056
Net Profit on Sales 27.5% 19.1% 19.3% 15.8% 19.9% 21.6%
Cash Flow/share $0.67 $1.13 $0.97 $0.54 $0.18 --
Book Value/share $5.00 $5.25 $4.25 $4.00 $2.38 $2.38
Return on Equity 13.6% 17.9% 21.6% 16.3% 16.4% 21.0%
Debt to Equity 46.0% 59.0% 26.0% 30.0% 20.0% --
Glossary Disclaimer Page 1 of 3
Report Date: July 08, 2011
National Bank of Greece S.A.
NYSE: NBG
Price as of 07/08/2011
$1.30
STRONG BUY
Glossary Disclaimer Copyright ©2011 Ford Equity Research www.fordequity.com
Recommendation Summary
Ford's Strong Buy on National Bank of Greece S.A. is the result of our systematic analysis on three basic characteristics: earnings strength, relative valuation, and
recent stock price movement. The company has produced a positive trend in earnings per share over the past 5 quarters. Because the company lacks sufficient
analyst estimate data, we place greater weight on the historical EPS trend as the measure of earnings strength. Based on operating earnings yield, the company is
undervalued when compared to all of the companies we cover. Share price changes over the past year indicates that NBG will perform poorly over the near term.
Earnings Strength is POSITIVE
Ford's earnings momentum measures the acceleration or deceleration in trailing 12 month
operating earnings per share growth. The upward curvature of the plotted points in the graph on
the right indicates that while National Bank of Greece S.A.'s earnings have increased from $0.27
to an estimated $0.61 over the past 5 quarters, they have shown acceleration in quarterly growth
rates when adjusted for the volatility of earnings. This indicates an improvement in future
earnings growth may occur.
Nearly 40 years of research have shown that the change in the growth of earnings per share is an
important factor that drives stock price performance. Ford measures earnings momentum and
analysts' forecast changes to get an early indication of changing earnings patterns.
Estimate data for National Bank of Greece S.A. is not available. However, the lack of analyst
forecast changes and a comparison of reported versus expected earnings does not inhibit our
ability to assess NBG's earnings strength. As a matter of fact, our research has shown that our
earnings momentum measure is a strong indicator of stock price performance in companies with
little or no analyst coverage.
TTM Operating EPS in US ($)
Positive earnings trend over past 5 quarters
0.27
9/10
0.27
12/10
0.39
3/11
0.50
6/11
0.61
9/11E
Earnings Momentum POSITIVE
very negative neutral very positive
Current FY Estimate Change NEUTRAL
very negative neutral very positive
Next Fiscal Year Estimate Change VERY NEGATIVE
very negative neutral very positive
Reported vs Expected EPS NA
very negative neutral very positive
Relative Valuation is VERY POSITIVE
National Bank of Greece S.A.'s operating earnings yield of 46.9% ranks above 100% of the other
companies in the Ford universe of stocks, indicating that it is undervalued. Ford measures the
relative valuation of each company against all other companies in our research universe.
Operating earnings yield, an earnings-to-price ratio based on the last 3 quarters of operating
earnings and the current quarter's estimate, has proven to be the most reliable relative valuation
measure. A stock may stay undervalued or overvalued for a long period of time. For this reason, it
is important to combine this factor with shorter-term predictive factors such as earnings
momentum or price momentum to identify more imminent valuation adjustments.
Operating Earnings Yield(%) within the Ford Universe
min max
Top 20%
Above Average
Average
Below Average
Bottom 20%
Earnings Yield -3 -100 3 5 8 1000+
NBG 46.9%
Operating Earnings Yield VERY POSITIVE
very negative neutral very positive
Price Movement is NEGATIVE
National Bank of Greece S.A.'s stock price is down 39.2% in the last 12 months, down 27.8% in
the past quarter and down 1.5% in the past month. This historical performance should lead to
below average price performance in the next one to three months.
Historical price action of a company's stock is an especially helpful measure used to identify
intermediate and short term performance potential. Long term historical performance is a good
predictor of future price performance, but much more importantly, large price movements over
the intermediate and short term tend to reverse themselves. Ford's price momentum measure
integrates historical long, intermediate and short term price changes, creating ratings that are
highest for stocks with strong twelve month price performance that have had a price
consolidation in the past quarter and month.
Stock Price is down 39.2% in the past year
NBG $1.30
07/10 2011
1 Year Price Change of -39.2% VERY NEGATIVE
very negative neutral very positive
1 Quarter Price Change of -27.8% VERY POSITIVE
very negative neutral very positive
1 Month Price Change of -1.5% VERY POSITIVE
very negative neutral very positive
Page 2 of 3
Report Date: July 08, 2011
National Bank of Greece S.A.
NYSE: NBG
Price as of 07/08/2011
$1.30
STRONG BUY
Copyright ©2011 Ford Equity Research www.fordequity.com
Ford Stock Ratings: Ford covers approximately 4,000 stocks using a proprietary
quantitative model that evaluates a company’s earnings strength, its relative valuation
and recent price movement. Ford’s five recommendation ratings include strong buy, buy,
hold, sell, strong sell. For all stocks in our coverage universe, ratings are generated each
week and reflect the fundamental and price data as of the last trading day of the week.
Ford Stock Percentage of 12-month Relative
Rating Universe With Rating Return Forecast
STRONG BUY 8.7% Significantly above average
BUY 16.6% Above average
HOLD 57.8% Average
SELL 11.9% Below average
STRONG SELL 5.0% Significantly below average
Earnings Strength: Earnings strength is a weighted combination of factors that
measure a company’s earnings growth performance. These include Ford’s proprietary
Earnings Momentum model, changes in analysts’ estimates for the current and next fiscal
year, and earnings surprises as compared to estimates. Combined score ratings and
percentiles are as follows: Very Positive – top 20%, Positive - next highest 20%, Neutral –
middle 20%, Negative - second lowest 20%, Very Negative – lowest 20%.
Relative Valuation: The coverage universe is sorted in descending order based on
Ford’s operating earnings yield measure. Operating earnings yield is the ratio of 12-month
operating earnings per share (including the current quarter estimated EPS) to closing
share price on the report date. Relative valuation ratings and percentiles are as follows:
Very Positive – top 20%, Positive - next highest 20%, Neutral – middle 20%, Negative -
second lowest 20%, Very Negative – lowest 20%.
Price Movement: Price movement is a proprietary evaluation based on a company’s
relative share price change in the past 1-year, 1-quarter and 1-month period. In the Ford
analysis, positive price changes in the past 1-year period are a favorable indication of
nearterm price gain. Conversely, positive price changes in the past quarter or month
periods can indicate a short-term overbought condition resulting in negative near-term
price change. Price movement score ratings and percentiles are as follows: Very Positive –
top 20%, Positive - next highest 20%, Neutral – middle 20%, Negative - second lowest
20%, Very Negative – lowest 20%.
Industry Performance: Ford measures the relative performance of the 88 industry
groups that we cover. The top 20% of industries based on our metric are expected to
have above average near-term performance and are classified as Positive. The bottom
20% based on the same metric are expected to have below average near-term
performance and are classified as Negative. The remaining middle 60% of industries are
expected to have average performance and are classified as Neutral.
Operating Earnings per Share: Earnings per share figures in the Ford Valuation
Bands, quarterly earnings series and 5-quarter earnings trend plot reflect Ford’s
operating earnings per share. Operating earnings per share are earnings per share from
continuing operations and before accounting changes that have been adjusted to
eliminate non-recurring and unusual items. In this way, earnings trend and valuation
measurements are not affected by one-time and non-operational items that can skew
earnings results.
Peer Group: Ford classifies each company in our coverage universe into one of 232
peer group categories based on industry group, products or services offered, annual sales
level and market capitalization. Peer groups, which are made up of between 3 and 8
companies, are a useful point of industry reference and a source for alternative ideas
within an industry.
Quality Rating: Quality Rating is based on factors that indicate a company’s overall
financial strength and earnings predictability. Each company in the Ford database is
assigned a quality rating ranging from A+ to C- based on size, debt level, earnings history
and industry stability. High quality stocks tend to have higher average market
capitalizations and annual sales, as well as lower average levels of debt as a percent of
equity and lower earnings variability. High quality stocks also tend to have lower
standard deviations of annual returns. Accordingly, a firm’s quality rating may be used to
gauge the risk associated with a particular stock. The Quality Rating letter grades are
translated into the following categories: A- and higher are High Quality; B and B+ are
Good Quality; B- is Average Quality; C+ is Low Quality; C and lower are Very Poor Quality.
Valuation Band: The Ford Valuation Band chart shows the price performance of the
stock over the past 5 year period in relation to its historical price/earnings valuation
range. The red and green lines indicate the highest and lowest P/E, respectively, in the
past 5 years multiplied by trailing 12-month operating earnings per share at the plotted
point. The end point prices shows the current share price (in black) along with the
potential high price based on the highest realized P/E in the past 5 years (in red),
potential low price based on lowest realized P/E in the past 5 years (in green), and
trailing 10-month average price (in yellow).
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