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Is ING Groep (ING) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put ING Groep N.V. (ING - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, ING Groep has a trailing twelve months PE ratio of 12.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 21.0. If we focus on the stock’s long-term PE trend, the current level puts ING Groep’s current PE ratio slightly above its midpoint (which is 11.2) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 13.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that ING Groep has a forward PE ratio (price relative to this year’s earnings) of just 11.2, so it is fair to say that a slightly more value-oriented path may be ahead for ING Groep’s stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
ING Groep’s PEG ratio stands at just 2.3, compared with the industry average of 1.1. This suggests a slightly overvalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, ING Groep currently has a Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes ING a solid choice for value investors.
What About the Stock Overall?
Though ING Groep might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of A. This gives ING a VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full-year 2017 has seen one estimate go higher in the past sixty days, compared to none lower, while the full-year 2018 estimate has seen a similar trend in the same time period.
This has had a favorable impact on the consensus estimate, as the full-year 2017 consensus estimate has risen about 1.3% in the past two months, while the full-year 2018 estimate has inched up 0.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat favorable trend is why the stock has just a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
ING Groep is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Its strong Zacks Rank also indicates robust growth potential in the near future. However, the company’s prospects might be constrained due to adverse broader factors, as it has a sluggish industry rank (bottom 30% out of more than 250 industries). In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Is ING Groep (ING) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put ING Groep N.V. (ING - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, ING Groep has a trailing twelve months PE ratio of 12.1, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 21.0. If we focus on the stock’s long-term PE trend, the current level puts ING Groep’s current PE ratio slightly above its midpoint (which is 11.2) over the past five years.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 13.2. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that ING Groep has a forward PE ratio (price relative to this year’s earnings) of just 11.2, so it is fair to say that a slightly more value-oriented path may be ahead for ING Groep’s stock in the near term too.
PEG Ratio
While earnings are certainly important, it is essential to know how much you are paying for the growth of earnings as well. One can easily do that with the PEG ratio (ratio of the P/E to the expected future earnings growth rate). The PEG ratio gives a more complete picture of the valuation of a stock than the P/E ratio.
ING Groep’s PEG ratio stands at just 2.3, compared with the industry average of 1.1. This suggests a slightly overvalued trading relative to its earnings growth potential right now.
Broad Value Outlook
In aggregate, ING Groep currently has a Value Style Score of B, putting it into the top 40% of all stocks we cover from this look. This makes ING a solid choice for value investors.
What About the Stock Overall?
Though ING Groep might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of F and a Momentum score of A. This gives ING a VGM score—or its overarching fundamental grade—of C. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The full-year 2017 has seen one estimate go higher in the past sixty days, compared to none lower, while the full-year 2018 estimate has seen a similar trend in the same time period.
This has had a favorable impact on the consensus estimate, as the full-year 2017 consensus estimate has risen about 1.3% in the past two months, while the full-year 2018 estimate has inched up 0.6%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
ING Group, N.V. Price and Consensus
ING Group, N.V. Price and Consensus | ING Group, N.V. Quote
This somewhat favorable trend is why the stock has just a Zacks Rank #2 (Buy) and why we are looking for better performance from the company in the near term.
Bottom Line
ING Groep is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Its strong Zacks Rank also indicates robust growth potential in the near future. However, the company’s prospects might be constrained due to adverse broader factors, as it has a sluggish industry rank (bottom 30% out of more than 250 industries). In fact, over the past one year, the sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>