SCGLF - Sustainable Value Creation Still Beyond Société Générale's Grasp

2024-06-19 05:01:14 ET

Summary

• Société Générale has struggled with restructuring efforts for over a decade, lagging behind peers in most important performance metrics.
• First quarter results showed some improvement, but the quality of the beat was poor and there are ongoing challenges in the core French retail operations.
• Asset disposals may help improve returns, but more radical restructuring may be needed for sustained progress. Fortunately, SocGen has a new and well-regarded CEO in place to make those moves.
• It's hard to have much faith in the never-ending turnaround story, but very low expectations do establish a bar from which the shares could outperform.

Some businesses just seem to be in perpetual restructuring, as the nature of the assets within the business just don’t allow the company to break into the clear and generate attractive returns on capital. This could well be the case for Société Générale ( OTCPK:SCGLY ) (“SocGen”), as this large multinational French bank has seemingly been under constant restructuring and turnaround plans for more than a decade....

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