UBS stock (NYSE: UBS) has gained 1% year-to-date, lagging behind the S&P 500 which has seen a 9% increase over the same period. Currently trading at $31 per share, UBS is at par with its fair value estimate according to Trefis. Despite this, the stock has seen significant gains of 100% from $15 in early January 2021 to around $30 now. However, UBS still underperformed compared to the S&P 500, with returns of 26% in 2021, 4% in 2022, and 66% in 2023.
Beating the S&P 500 consistently has been challenging for individual stocks in recent years, including heavyweights in the Financials sector and megacap companies. In contrast, the Trefis High Quality Portfolio, consisting of 30 stocks, has outperformed the S&P 500 each year over the same period. The portfolio offers better returns with less risk, making it a more stable investment option. With the current uncertain macroeconomic environment, there is potential for UBS to see a strong jump in the future, given its recent performance and market conditions.
UBS reported better-than-expected earnings in the fourth quarter of 2023, with total revenues reaching $10.86 billion, a 35% year-over-year increase. This growth was partly due to the consolidation of Credit Suisse revenues and organic growth. Key segments such as global wealth management and personal & corporate banking units saw significant revenue increases. However, total noninterest expenses rose by 88% in the quarter, leading to an adjusted net income of -$279 million compared to $1.65 billion.
In FY2023, UBS’s net revenues grew by 18% to $40.8 billion, driven by strong performance in wealth management and personal & corporate banking units. The acquisition of Credit Suisse also resulted in a one-time gain of negative goodwill. Despite increases in provisions for credit losses and operating expenses, the adjusted net income improved by over 250% to $27.8 billion. Looking ahead, UBS is expected to continue this trend with revenues forecasted to reach $46.5 billion in FY2024, and adjusted net income remaining around $3.95 billion.
Overall, UBS’ strong financial performance and growth prospects indicate a positive outlook for the company. With a potential annual GAAP EPS of $1.20 and a P/E multiple of just under 26x, UBS is expected to maintain a valuation of $31 per share. Investors looking for market-beating portfolios can consider the Trefis High Quality Portfolio, which has shown consistent outperformance compared to the S&P 500. As UBS navigates through the current economic challenges, its solid earnings and revenue growth position it well for future success in the financial markets.
