NatWest Group (NWG) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #1 (Strong Buy). An upward trend in earnings estimates -- one of the most powerful forces impacting stock prices -- has triggered this rating change.A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.The power of a ch ...

Company Overview - NatWest Group (NWG) is headquartered in London and operates in the Finance sector, with a stock price change of 27.83% since the beginning of the year [3] - The bank currently pays a dividend of $0.39 per share, resulting in a dividend yield of 5.94%, which is significantly higher than the Banks - Foreign industry's yield of 3.73% and the S&P 500's yield of 1.6% [3] Dividend Performance - The current annualized dividend of $0.77 represents a 75% increase from the previous year, with a five-year average annual increase of 46.32% [4] - NatWest Group has increased its dividend five times on a year-over-year basis over the past five years [4] - The current payout ratio is 52%, indicating that the company pays out 52% of its trailing 12-month earnings per share as dividends [4] Earnings Outlook - For the fiscal year, NWG anticipates solid earnings growth, with the Zacks Consensus Estimate for 2025 at $1.50 per share, reflecting a 12.78% increase from the previous year [5] Investment Appeal - Dividends are favored by investors for various reasons, including tax advantages and reduced overall portfolio risk, which can enhance stock investing profits [6] - Larger, established companies are more likely to offer dividends compared to tech start-ups or high-growth businesses [7] - NWG is positioned as an attractive dividend play and a compelling investment opportunity, holding a Zacks Rank of 1 (Strong Buy) [7]

Market Overview - U.S. stock markets experienced severe volatility in April, with the S&P 500 and Dow falling by 3.2% and 0.8%, respectively, while the Nasdaq Composite gained 0.9% [1] - The volatility was attributed to President Trump's tariffs and trade-related policies, with economists warning of a near-term recession as U.S. GDP contracted for the first time in three years in Q1 2025 [2] Economic Indicators - Better-than-expected nonfarm payrolls data for April and optimism regarding U.S. government trade negotiations are expected to boost confidence in equities [3] Investment Opportunities - Recommended stocks for investment in May include Sprouts Farmers Market Inc. (SFM), Philip Morris International Inc. (PM), Sony Group Corp. (SONY), Agnico Eagle Mines Ltd. (AEM), and NatWest Group plc (NWG), all of which have shown double-digit returns in the past month and hold a Zacks Rank 1 (Strong Buy) [4][5] Company Analysis Sprouts Farmers Market Inc. (SFM) - Focus on product innovation, e-commerce, and private label offerings has led to better-than-expected Q4 2024 results, with both revenue and earnings growing year over year [9] - SFM expects net sales to rise between 10.5% and 12.5% in 2025, with comparable store sales anticipated to increase by 4.5-6.5% [10] - Expected revenue and earnings growth rates for the current year are 13.4% and 30.7%, respectively, with a 5.2% improvement in earnings estimates over the last week [11] Philip Morris International Inc. (PM) - Strong pricing power and an expanding smoke-free product portfolio are driving growth, with PM aiming to become substantially smoke-free by 2030 [13] - Anticipates positive volume growth for the fifth consecutive year, with an expected increase of 2%, and smoke-free products projected to grow by 12-14% [14] - Expected revenue and earnings growth rates for the current year are 8.1% and 13.7%, respectively, with a 4.6% improvement in earnings estimates over the last 30 days [15] Sony Group Corp. (SONY) - Growth is supported by strong performance in Game & Network Services, Music, and Financial Services, despite challenges in the Entertainment, Technology & Services unit [16] - Fiscal 2024 sales view raised to ¥13,200 billion from ¥12,710 billion, driven by momentum in Financial Services and G&NS units [17] - Expected revenue and earnings growth rates for the current year are 0.7% and 14.4%, respectively, with a 0.7% improvement in earnings estimates over the last week [18] Agnico Eagle Mines Ltd. (AEM) - Focus on production growth through project execution and strategic acquisitions, including the merger with Kirkland Lake Gold [19][20] - Expected revenue and earnings growth rates for the current year are 20.6% and 44.4%, respectively, with a 6.1% improvement in earnings estimates over the last week [20] NatWest Group plc (NWG) - Provides a range of banking and financial services across various segments, including Retail Banking and Private Banking [21][22] - Expected revenue and earnings growth rates for the current year are 10.8% and 12.8%, respectively, with a 2.7% improvement in earnings estimates over the last week [22]

Financial Performance - Attributable profit for Q1 2025 was £1,252 million, with earnings per share of 15.5 pence and a return on tangible equity (RoTE) of 18.5%[14] - Operating profit before tax for Q1 2025 was £1,812 million, representing a 21.4% increase compared to Q4 2024[19] - Total income for Q1 2025 was £3,980 million, an increase of 14.5% compared to £3,475 million in Q1 2024[131] - Profit for the period increased to £1,341 million in Q1 2025, up 1% from £1,328 million in Q4 2024 and significantly up from £987 million in Q1 2024[106] - Total comprehensive income for the period reached £1,492 million, compared to £1,267 million in Q4 2024 and £903 million in Q1 2024, reflecting a strong year-over-year growth[106] Income and Revenue Growth - Total income excluding notable items increased by £80 million, or 2.1%, compared to Q4 2024, reaching £3,952 million, and was £538 million higher than Q1 2024[14] - Total income increased by 4.1% to £3,980 million compared to Q4 2024 and was 14.5% higher than Q1 2024, driven by deposit margin expansion and strong customer activity in trading income[24] - Total income increased by £56 million, or 2.7%, compared to Q4 2024, driven by strong customer activity in markets trading income and customer lending growth[39] Customer Loans and Deposits - Net loans to customers excluding central items rose by £3.4 billion, or 0.9%, to £371.9 billion, driven primarily by growth in Retail Banking mortgages and Corporate & Institutions[14] - Customer deposits excluding central items increased by £2.1 billion, or 0.5%, in the quarter, despite seasonal tax payment impacts[14] - Customer deposits rose to £434,617 million as of 31 March 2025, slightly up from £433,490 million at the end of 2024[108] - Net loans to customers increased by £3.4 billion to £371.9 billion, primarily due to a £2.0 billion increase in Retail Banking mortgage balances[24] Capital and Ratios - Common Equity Tier 1 (CET1) ratio improved to 13.8%, up 20 basis points from December 2024[16] - The CET1 ratio increased by 20 basis points to 13.8%, supported by attributable profit, despite an increase in risk-weighted assets (RWAs) of £3.8 billion to £187.0 billion[28] - The leverage ratio increased by 20 basis points to 5.2%, due to a £1.5 billion increase in Tier 1 capital, offset by a £5.3 billion increase in leverage exposure[77] - The liquidity coverage ratio (LCR) remained strong at 150%, with £54.2 billion headroom above the 100% minimum requirement[20] Impairment and Credit Quality - The net impairment charge was £189 million, or 19 basis points of gross customer loans, with an ECL provision of £3.5 billion and an ECL coverage ratio increasing from 0.83% to 0.86%[24] - An impairment charge of £78 million in Q1 2025, up from £39 million in Q1 2024, reflecting higher Stage 3 charges from larger counterparties[44] - ECL provisions by stage showed £1,890 million for Stage 1, £787 million for Stage 2, and £2,143 million for Stage 3, indicating a significant focus on higher-risk segments[67] Strategic Initiatives - The company continues to target providing £100 billion in climate and sustainable funding and financing by the end of 2025[14] - NatWest Group aims to provide £100 billion in climate and sustainable funding and financing by the end of 2025, with a target of at least £10 billion in lending for residential properties with EPC ratings A and B[142] Operational Efficiency - The cost:income ratio (excluding litigation and conduct) improved to 48.6% in Q1 2025 from 58.4% in Q1 2024[133] - Other operating expenses were £119 million, or 10.5%, lower than Q4 2024, mainly due to the non-repeat of the Q4 2024 annual Bank Levy[40] Employee and Market Data - The number of employees (FTEs) was reported at 61,300[50] - The average total equity increased to £40,354 million in Q1 2025 from £37,490 million in Q1 2024, reflecting a growth of 5.0%[139] Market Position and Growth - Retail Banking achieved a return on equity of 24.5% and an operating profit of £750 million, benefiting from deposit margin expansion[26] - Commercial & Institutional generated total income of £2,142 million, with an operating profit of £1,020 million and a return on equity of 19.3%[36]

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Investors in NatWest Group plc (NWG) need to pay close attention to the stock based on moves in the options market lately. That is because the May 16, 2025 $5 Put had some of the highest implied volatility of all equity options today. What is Implied Volatility?Implied volatility shows how much movement the market is expecting in the future. Options with high levels of implied volatility suggest that investors in the underlying stocks are expecting a big move in one direction or the other. It could also mea ...

Core Viewpoint - NatWest Group Plc has shown strong share price performance over the last year, primarily supported by the U.K. government's stake selldown, despite previous bearish sentiments towards the company [1]. Group 1: Company Performance - The share price of NatWest Group Plc has been robust in the past year [1]. - The performance is attributed to the U.K. government's reduction of its stake in the company [1]. Group 2: Analyst Background - The analysis is provided by a fund manager/analyst with over 18 years of experience in the financial sector, specifically in portfolio management [1].

Company Overview - NatWest Group (NWG) is headquartered in London and has experienced a price change of 17.9% this year [3] - The company currently pays a dividend of $0.38 per share, resulting in a dividend yield of 6.35%, which is significantly higher than the Banks - Foreign industry's yield of 3.7% and the S&P 500's yield of 1.59% [3] Dividend Performance - The current annualized dividend of $0.76 represents a 72.7% increase from the previous year [4] - Over the last 5 years, NatWest Group has increased its dividend 4 times year-over-year, with an average annual increase of 41.06% [4] - The company's current payout ratio is 23%, indicating that it paid out 23% of its trailing 12-month earnings per share as dividends [4] Earnings Growth - The Zacks Consensus Estimate for NatWest Group's earnings for 2025 is $1.42 per share, reflecting a year-over-year growth rate of 6.77% [5] Investment Appeal - NatWest Group is considered a compelling investment opportunity due to its attractive dividend yield and strong Zacks Rank of 1 (Strong Buy) [7]

Core Industry Insights - The Zacks Foreign Banks Industry is undergoing restructuring to focus on core operations, which is expected to elevate expenses initially but drive long-term growth [1][5] - The industry is facing uneven economic recovery globally, impacting revenue growth, but lower interest rates are anticipated to provide support [1][6] Key Themes Influencing the Industry - **Lower Interest Rates**: Central banks are lowering interest rates, which is expected to support net interest income (NII) and margins for foreign banks, leading to improved loan demand and revenue growth [4] - **Restructuring Efforts**: Many foreign banks are divesting non-core operations to enhance focus on profitable markets, changing their revenue mix [5] - **Global Economic Recovery**: The post-COVID-19 economic recovery has been uneven, which may affect profitability for foreign banks in the near term [6] Industry Performance and Outlook - The Zacks Foreign Banks Industry ranks 47, placing it in the top 19% of over 250 Zacks industries, indicating positive near-term prospects [7][8] - Aggregate earnings estimates for the industry have been revised upward by 4.2% since November 2024, reflecting growing analyst confidence [9] Stock Performance - The Zacks Foreign Banks Industry has outperformed the S&P 500 and the broader finance sector, with a collective stock rise of 22.9% over the past year [11] Valuation Metrics - The industry has a trailing 12-month price-to-tangible book ratio (P/TBV) of 2.38X, significantly lower than the S&P 500's 12.97X, indicating a discount compared to the broader market [14][16] Company Highlights - **HSBC**: With $3.02 trillion in assets, HSBC is focusing on Asia and has initiated restructuring to achieve $1.5 billion in annualized savings by 2026, while winding down non-core investment banking activities [18][20][21] - **Barclays**: Holding £1,518.2 billion ($1,897.8 billion) in assets, Barclays has seen a decrease in operating expenses and aims for gross efficiency savings of £2 billion by 2026 [24][25][26][27] - **NatWest**: NatWest is launching a Fintech Growth Programme and expects to achieve a return on tangible equity of 15-16% by the end of 2025, with shares rising 29.2% in the past six months [29][30][31]

Market Overview - U.S. stocks experienced a decline in February, with the S&P 500 falling by 2%, the Nasdaq Composite dropping by 5.4%, and the Dow Jones Industrial Average decreasing by 2.8% [1] - The Financial Services sector was a standout performer, increasing by 1.7% during the same period [1] Selected Finance Stocks - Three finance stocks were identified as outperformers in February: Barclays (BCS), NatWest Group (NWG), and Mr. Cooper Group (COOP), all of which exceeded the performance of the S&P 500 Index [2] Economic Concerns - The U.S. stock market is facing challenges due to economic health concerns and uncertainties related to the Trump administration's policies [5] - President Trump's trade policies, including a 20% tariff on Chinese imports and a 25% import tax on steel and aluminum, are contributing to inflationary pressures that may hinder economic growth [6] Barclays (BCS) - Barclays is focusing on simplifying operations and core business areas, having divested its Germany-based consumer finance business in February 2025 [9] - The company aims for gross efficiency savings of £0.5 billion in 2025 and a total of £2 billion by the end of 2026 [10] - Earnings for 2025 and 2026 are projected to grow by 9.8% and 25.9% year over year, respectively, with a current market cap of $57.11 billion and a Zacks Rank of 1 [11] NatWest Group (NWG) - NatWest operates in various banking and financial services, including personal and business banking, consumer loans, and insurance [11] - The company is launching its first Fintech Growth Programme to support fintech startups, and it has made progress in growing its customer businesses and improving productivity [12] - Expected return on tangible equity is 15-16% by the end of 2025, with earnings projected to rise by 7% and 13.7% in 2025 and 2026, respectively, and a market cap of $49.3 billion [13] Mr. Cooper Group (COOP) - Mr. Cooper Group is expanding through acquisitions, including the $1.3 billion acquisition of Flagstar Bank N.A.'s mortgage operations [14] - The company reported total assets of $18.9 billion, a 16% sequential increase, with cash and cash equivalents rising by 2.8% [15] - Earnings for 2025 and 2026 are expected to grow by 27% and 18.3% year over year, respectively, with a market cap of $7.2 billion and a Zacks Rank of 2 [15]