No one could ignore NatWest's price drop during afternoon trading session, as the stock fell to $13.0, logging a -6.0% underperformance of the S&P 500. The stock is still trading within range of its average target price of $13.54, which may prove to be a resistance point to further declines. Analysts have given the Commercial Banking stock target prices ranging from 13.0 to 14.09 dollars per share, with an average rating of buy.
The market seems to share this rosy outlook, since NatWest has a short interest of only 0.0%. This represents the percentage of the share float that is being shorted, and each short position stands for an investor's expectation that the price of the stock will go down in the future.
Short selling involves borrowing shares and then selling them at current market prices. In the successful version of the strategy, the shares are purchased at a lower price at some time in the future. The investor then returns the shares to the lender, and keeps the profit made on the sell/buy transaction.
One way to tell how the market is perceiving a stock is to look to its rate of institutional ownership. With their vast resources, hedge funds, pension funds, and wealth managers are able to perform due diligence to a level that most investors cannot. So it follows that their investment decisions may be more educated. But we also know that bankers and portfolio managers can make mistakes too.
So the fact that NatWest has a low rate of institutional ownership at 3.9% is not an immediate red flag. It just means that something about the company has kept institutional investors from committing -- or the stock is simply flying under their radar.
Overall, there is mixed market sentiment towards NatWest because of an analyst consensus of some upside potential, a buy rating, a very low short interest, and a very small number of institutional investors. Investors should not base their decisions on market sentiment only, they should also be aware of a stock's fundamentals before committing.
At a glance, here are some essential statistics you may want to know about NWG:
-
It has trailing 12 month earnings per share (EPS) of $1.57 per share
-
NatWest has a trailing 12 month Price to Earnings (P/E) ratio of 8.3 while the S&P 500 average is 29.3
-
The company has a Price to Book (P/B) ratio of 2.52 in contrast to the S&P 500's average ratio of 4.74
-
NatWest is a Finance company, and the sector average P/E and P/B ratios are 15.92 and 1.78 respectively
