Regional Banking company Deutsche Bank AG is taking Wall Street by surprise today, falling to $10.04 and marking a -4.38% change compared to the S&P 500, which moved 1.0%. DB is -19.61% below its average analyst target price of $12.49, which implies there is more upside for the stock. However, the average analyst rating for the stock is underperform -- a more pessimistic outlook than you might expect. Over the last year, shares of Deutsche Bank AG have offered a similar return to the S&P 500, moving -12.17%.
Deutsche Bank Aktiengesellschaft offers investment, financial and related products and services to individuals, corporate entities and institutional clients worldwide.
Deutsche Bank AG's trailing 12 month P/E ratio is 4, based on its trailing EPS of $2.26. The company has a forward P/E ratio of according to its forward EPS of $2.32 -- which is an estimate of what its earnings will look like in the next quarter. As of the first quarter of 2023, the average Price to Earnings (P/E) ratio for US finance companies is 14.34, and the S&P 500 has an average of 15.97. The P/E ratio consists in the stock's share price divided by its earnings per share (EPS), representing how much investors are willing to spend for each dollar of the company's earnings. Earnings are the company's revenues minus the cost of goods sold, overhead, and taxes.
A significant limitation with the price to earnings analysis is that it doesn’t account for investors’ growth expectations in the company. For example, a company with a low P/E ratio may not actually be a good value if it has little growth potential. Conversely, companies with high P/E ratios may be fairly valued in terms of growth expectations.
When we divide Deutsche Bank AG's P/E ratio by its projected 5 year earnings growth rate, we see that it has a Price to Earnings Growth (PEG) ratio of 0.122. This tells us that the company is largely undervalued in terms of growth expectations -- but remember, these growth expectations could turn out to be wrong!
Another valuation metric for analyzing a stock is its Price to Book (P/B) Ratio, which consists in its share price divided by its book value per share. The book value refers to the present liquidation value of the company, as if it sold all of its assets and paid off all debts). Deutsche bank ag's P/B ratio of 0.299 indicates that the market value of the company is less than the value of its assets -- a potential indicator of an undervalued stock. The average P/B ratio of the Finance sector was 1.57 as of the first quarter of 2023.
Since it has a very low P/E ratio and an exceptionally low P/B ratio Deutsche Bank AG is likely undervalued at today's prices. The company has poor growth indicators because of shrinking earnings and weak net margins with a negative growth trend. We hope you enjoyed this overview of DB's fundamentals. Be sure to check the numbers for yourself, especially focusing on their trends over the last few years.