ING Groep NV (ING): A Deep Dive into Its Performance Potential
Long-established in the Banks industry, ING Groep NV (NYSE:ING) has enjoyed a stellar reputation. However, it has recently witnessed a daily loss of 5.2%, juxtaposed with a three-month change of 3.11%. Fresh insights from the GuruFocus Score Rating hint at potential headwinds. Notably, its diminished rankings in financial strength, growth, and valuation suggest that the company might not live up to its historical performance. Join us as we dive deep into these pivotal metrics to unravel the evolving narrative of ING Groep NV.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
Financial strength rank: 3/10
Profitability rank: 5/10
Growth rank: 4/10
GF Value rank: 5/10
Momentum rank: 9/10
Based on the above method, GuruFocus assigned ING Groep NV the GF Score of 69 out of 100, which signals poor future outperformance potential.
ING Groep NV: A Snapshot of Its Business
ING Groep NV, with a market cap of $46.44 billion and sales of $21.69 billion, is a well-established player in the banking industry. The company was created in 1991 through the merger of the Dutch postal bank and NN Insurance. Through a series of further acquisitions, ING built up a global footprint. However, the 2008 financial crisis forced ING to separate its banking and insurance activities, reverting to being solely a bank. Today, ING has market-leading banking operations in the Netherlands and Belgium, and a range of digital banks across Europe and Australia. Its global wholesale banking operation is primarily focused on lending.
Financial Strength Analysis
ING Groep NV's financial strength indicators present some concerning insights about the company's balance sheet health. The company's low cash-to-debt ratio at 0.84 indicates a struggle in handling existing debt levels. The company's debt-to-equity ratio is 2.68, which is worse than 90.57% of 1326 companies in the Banks industry. A high debt-to-equity ratio suggests over-reliance on borrowing and vulnerability to market fluctuations. Additionally, the company's debt-to-Ebitda ratio is 9999, which is above Joel Tillinghast's warning level of 4 and is worse than 0% of 30 companies in the Banks industry. Tillinghast said in his book Big Money Think's Small: Biases, Blind Spots, and Smarter Investing that a high debt-to-Ebitda ratio can be a red flag unless tangible assets cover the debt.
Profitability Analysis
ING Groep NV's low Profitability rank can also raise warning signals. ING Groep NV's Net Margin has declined over the past five years (-22.35%), as shown by the following data: 2018: 25.45; 2019: 26.47; 2020: 13.93; 2021: 26.12; 2022: 19.76; .
Growth Prospects
A lack of significant growth is another area where ING Groep NV seems to falter, as evidenced by the company's low Growth rank.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights the firm's unparalleled position for potential underperformance. While ING Groep NV has a rich history and a significant presence in the banking industry, its current financial indicators suggest that it may struggle to maintain its past performance levels. Investors should consider these factors when making investment decisions.
GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
