KB Financial Group Inc’s stock price surged to a price of $49.52 Friday. Ending the day with a 6.8% increase, KB shares outperformed the S&P500 by 6.0%, closing in on their 52 week high of $50.02 Over the last 12 months, KB Financial is up 12.2%, and has outperformed the S&P 500 by -8.4%. Now, the large-cap Finance company is 14.16% below its average target price of $57.69 and has an average analyst rating of buy.
KB Financial's trailing 12 month price to earnings (P/E) ratio is 5.7, which is its share price divided by its trailing earnings per share (EPS) of $8.64. The company has a forward P/E ratio of 4.9 based on its forward EPS of $10.09 -- which is an estimate of future earnings provided by management. The P/E ratio tells us how much investors are willing to pay for each dollar of the company's net earnings from its sales operations. By way of comparison, the average P/E ratio of the Finance sector is 12.38, but a company's price can remain stable for a long time even if it is over or undervalued.
Another metric for valuing a stock is its Price to Book (P/B) Ratio, which consists in its share price divided by its book value. The book value refers to the present value of the company if the company were to sell off all of its assets and pay all of its debts today - a number whose value may differ wildly based on who is doing the counting. Kb financial's P/B ratio of 0.0 indicates that the market value of the company is less than the value of its assets -- a potential indicator of an undervalued stock.
KB's average free cash flow in recent years is $-94341729333.3. This represents the sum of inflows and outflows of cash from all sources, including capital expenses. This is the pool of liquidity from which the company can reinvest in its business or pay out dividends to its investors. If these negative cash flows continue, the company may not be able to continue offering its investors a dividend, which over the last year has offered a yield of 6425.2%. While not ideal, negative free cash flows are common -- especially in capital intensive businesses or after a period of heavy re-investment.
Since it has a a Very low P/E ratio, no published P/B ratio, negative cash flows, and decent net margins, KB Financial is probably overvalued at current prices. Make sure to complement this brief quantitative review with a qualitative analysis of your own!