We've been asking ourselves recently if the market has placed a fair valuation on Lloyds Banking. Let's dive into some of the fundamental values of this Large-Cap Finance company to determine if there might be an opportunity here for value-minded investors.
a Very Low P/E Ratio but Priced Beyond Its Margin of Safety:
Lloyds Banking Group plc, together with its subsidiaries, provides a range of banking and financial products and services in the United Kingdom and internationally. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 15.92 and an average price to book (P/B) ratio of 1.78. In contrast, Lloyds Banking has a trailing 12 month P/E ratio of 12.6 and a P/B ratio of 6.57.
Lloyds Banking has moved 42.1% over the last year compared to 11.8% for the S&P 500 — a difference of 30.3%. Lloyds Banking has a 52 week high of $4.69 and a 52 week low of $2.56.
Exceptional EPS Growth but Negative Cash Flows:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $19,216 | $22,295 | $17,876 | $6,647 | $20,510 | $34,281 |
| Interest Income (M) | $2,921 | -$3,557 | $1,721 | $3,331 | $8,503 | $19,011 |
| Operating Margins | 15% | 6% | 7% | 19% | 8% | 6% |
| Net Margins | 4% | 6% | 11% | 22% | 13% | 13% |
| Net Income (M) | $781 | $1,368 | $2,020 | $1,476 | $2,654 | $4,477 |
| Depreciation & Amort. (M) | $1,358 | $1,334 | $1,582 | $1,186 | $1,572 | $3,426 |
| Diluted Shares (M) | 70,466 | 71,252 | 71,366 | 67,631 | 63,913 | 60,913 |
| Earnings Per Share | $0.01 | $0.02 | $0.02 | $0.02 | $0.04 | $0.06 |
| EPS Growth | n/a | 100.0% | 0.0% | 0.0% | 100.0% | 50.0% |
| Free Cash Flow (M) | -$431 | -$1,005 | -$101 | $9,961 | -$7,994 | -$4,393 |
| Total Debt (M) | $97,689 | $87,397 | $71,552 | $73,819 | $75,592 | $70,834 |
| Net Debt / EBITDA | 8.95 | 3.36 | -2.77 | -8.94 | -4.14 | 0.0 |
