It's been a great morning session for ING investors, who saw their shares rise 2.0% to a price of $12.89 per share. At these higher prices, is the company still fairly valued? If you are thinking about investing, make sure to check the company's fundamentals before making a decision.
ING Has Attractive Multiples and Trades Below Its Graham Number:
ING Groep N.V., a financial institution, provides various banking products and services in the Netherlands, Belgium, Rest of Europe, North America, Latin America, Asia, and Australia. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 14.34 and an average price to book (P/B) ratio of 1.57. In contrast, ING has a trailing 12 month P/E ratio of 8.8 and a P/B ratio of 0.9.
When we divideING's P/E ratio by its expected five-year EPS growth rate, we obtain a PEG ratio of 0.61, which indicates that the market is undervaluing the company's projected growth (a PEG ratio of 1 indicates a fairly valued company). Your analysis of the stock shouldn't end here. Rather, a good PEG ratio should alert you that it may be worthwhile to take a closer look at the stock.
The Business Runs With Low Leverage Levels:
| 2019-12-31 | 2020-12-31 | 2021-12-31 | 2022-12-31 | |
|---|---|---|---|---|
| Revenue (MM) | $18,307 | $17,819 | $18,285 | $18,590 |
| Interest Income (MM) | $14,079 | $13,600 | $13,615 | $13,756 |
| Net Margins | 26.12% | 13.55% | 26.12% | 19.76% |
| Net Income (MM) | $4,781 | $2,415 | $4,776 | $3,674 |
| Depreciation & Amort. (MM) | -$789 | -$829 | -$834 | -$711 |
| Earnings Per Share | $1.23 | $0.64 | $1.23 | $1.47 |
| EPS Growth | n/a | -47.97% | 92.19% | 19.51% |
| Diluted Shares (MM) | 3,895 | 3,901 | 3,891 | 3,609 |
| Free Cash Flow (MM) | $12,700 | $102,892 | -$15,127 | -$11,343 |
| Capital Expenditures (MM) | -$355 | -$287 | -$184 | -$231 |
| Long Term Debt (MM) | $135,116 | $77,615 | $114,794 | $118,323 |
| Net Debt / EBITDA | 1.19 | -1.83 | 0.38 | 1.62 |
ING has stable revenues and decreasing reinvestment in the business, decent net margins with a negative growth trend, and irregular cash flows. We also note that the company benefits from low leverage and positive EPS growth. Furthermore, ING's financial statements do not display any obvious red flags.
