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ING Groep N.V. (AMS:INGA) shareholders should be happy to see the share price up 17% in the last quarter. But that is minimal compensation for the share price under-performance over the last year. In fact, the price has declined 19% in a year, falling short of the returns you could get by investing in an index fund.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Unfortunately ING Groep reported an EPS drop of 13% for the last year. This reduction in EPS is not as bad as the 19% share price fall. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 9.02.
The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).
Dive deeper into ING Groep's key metrics by checking this interactive graph of ING Groep's earnings, revenue and cash flow.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for ING Groep the TSR over the last year was -15%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Investors in ING Groep had a tough year, with a total loss of 15% (including dividends), against a market gain of about 9.1%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 4.7%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. Before spending more time on ING Groep it might be wise to click here to see if insiders have been buying or selling shares.
Of course ING Groep may not be the best stock to buy. So you may wish to see this free collection of growth stocks.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on NL exchanges.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.