I was seeking a high dividend-yield stock and came across ING Groep N.V. (ING, Financial).
ING Groep N.V. has a forward dividend yield of 4.84% because it is distributing an annual dividend of 72 cents. The company was trading at $13.40 per share on the New York Stock Exchange and had a market capitalization of $54.11 billion as of Thursday.
The stock is not expensive according to the technical indicators of GuruFocus. The share price is below the 200, 100 and 50-SMA lines. Also, the current market value is, per share, only 19 cents off the 52-week low of $13.18. To the 52-week high of $20.58, there is a $7.20 long gap to fill.
For the 52 weeks through Aug. 15, the stock has fallen 25%.
Analysts predict that the annual net profit of the Dutch bank will grow every year at an average of 7% over the next five to six years.
The ING Group, abbreviation for Internationale Nederlanden Groep, is a Dutch multinational banking and financial services corporation, which is headquartered in Amsterdam (The Netherlands).
The bank globally reaches and serves clients in the following markets: retail banking, direct banking, commercial banking and investment banking. The Dutch bank provides its clients with asset management and is also engaged in the insurance services industry. Clients served by the Dutch bank are individuals, small- and medium-sized companies, and mid- sized corporates. ING Groep N.V. was created in 1991.
The ING Group is part of the Inter-Alpha Group of Banks, a cooperative consortium of 11 prominent European banks. ING Bank is one of the most important banks worldwide.
The company is delivering a good net income margin of $28.7%, which is higher than the industry median of 23.34%.
ING is beating its most direct peers also in terms of return on equity ratio. The ratio stands at 10.45%, above an industry median of 8.73%.
In addition, with a three-year revenue growth rate of 6.3%, the ING Group outperformed peers by 400 basis points. And when we consider the rate at which the ING Group has increased its adjusted earnings per share over the last three fiscal years, the Dutch bank has simply outclassed its peers with a 48.6% compared to the group's 4.8%.
However, GuruFocus is ranking ING lower than about 950 companies in terms of return on assets. The Global Banks – Global Industry accounts for a total of 1,396 entities.
Financially speaking, ING is moderately prepared in case of business slowdowns and recessions. GuruFocus assigns it a financial strength of 4 out of 10.
ING Groep has three "good signs" on GuruFocus after a thorough check-up conducted by the website, which considered about 32 items that cover the areas of profitability, financial strength, growth and valuation.
Some other indicators about the opportunity to invest in ING Groep tell that:
The stock is trading below the Peter Lynch Earnings Line (P/E = 15) value of $23.1 and the Price at Med P/E without NRI (P/E = 10.11) value of $15.6 per share.
The price-book ratio is 0.93, below an industry median of 1.24, and the price-earnings ratio is 9.03 versus an industry median of 14.8.
At 2.5, the price-sales ratio is nearly 67% above the threshold of 1.5, but it is still below the industry median of 3.41. The threshold of 1.5 is what value investors usually consider when they screen for stocks.
Valuation
The forward price-earnings ratio of the company is 8.99. When the forward price-earnings ratio is multiplied by earnings per share of about $1.63, it yields a value of $14.65 per share. The earnings per share of $1.63 is a quarterly weighted average for full fiscal years 2018 and 2019.
For the next 12 trading months Wall Street forecasts the share price will reach $20.40. The stock has a recommendation rating of 1 out of a total of 5. Therefore, the stock is seen as a strong buy.
It couldn’t be otherwise since with the U.S. Central Bank expects to proceed with at least two additional hikes in interest rates, and the financial sector is one of the sectors that will benefit the most.
The ING Groep is reporting 3.89 billion ADRs, of which almost 3.6% is held by institutions.
During the second quarter of 2018, Ken Fisher (Trades, Portfolio)Ă‚ increased his holding by 4.04% to 43,296,870 ADRs and Sarah Ketterer by 28.79% to 549,728 ADRs.
NWQ Managers (Trades, Portfolio), Jim Simons (Trades, Portfolio) and John Buckingham (Trades, Portfolio) reduced their positions.
Disclosure: I have no positions in any security mentioned in this article.
