Seeking Alpha: Societe Generale Not Getting Its Due

It's been a disappointing summer and fall for European bank stocks, and despite two solid quarters with double-digit earnings beats, Societe Generale (OTCPK:SCGLY) (GLE.FR) has been unable to beat that trend in European bank stocks. While the shares haven't done as badly as names like Credit Agricole (OTCPK:CRARY) (down about 24%), Banco Bilbao (NYSE:BBVA) (down about 25%), or UniCredit (OTCPK:UNCFF) (down 20%), SocGen is still down about 6% from my last update.

I believe this performance has created a more interesting gap between the bank's current price and long-term potential. The world has certainly changed for large banks, and the higher capital levels that regulators are demanding will make it much harder (if not impossible) to achieve past high-water marks in ROE/ROTE/ROA. What's more, I wouldn't say that Western Europe is quite the picture of economic health yet, and Russia still has the potential to get worse before it gets any better. All of that said, I think SocGen has made underrated progress with its French retail operations, its retail operations outside of France, and with its overall costs and capital allocation. I believe that fair value for the ADRs is around $11.50 to $12.50, making these shares a more interesting consideration particularly when including the dividend.

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Societe Generale Not Getting Its Due