After reading ING Groep NV.’s (ENXTAM:INGA) most recent earnings announcement (31 December 2017), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways. View our latest analysis for ING Groep
Were INGA’s earnings stronger than its past performances and the industry?
I prefer to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This method allows me to examine various companies in a uniform manner using the latest information. For ING Groep, its most recent bottom-line (trailing twelve month) is €4.91B, which compared to last year’s figure, has increased by 16.51%. Since these figures are somewhat short-term, I’ve determined an annualized five-year figure for ING Groep’s net income, which stands at €3.60B This means generally, ING Groep has been able to increasingly improve its bottom line over the past few years as well.
What’s the driver of this growth? Well, let’s take a look at if it is only because of an industry uplift, or if ING Groep has seen some company-specific growth. Over the past couple of years, ING Groep increased bottom-line, while its top-line fell, by efficiently managing its costs. This resulted in to a margin expansion and profitability over time. Inspecting growth from a sector-level, the NL banks industry has been growing, albeit, at a muted single-digit rate of 4.30% over the previous year, and 7.02% over the past five years. This means any recent headwind the industry is experiencing, ING Groep is less exposed compared to its peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While ING Groep has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research ING Groep to get a better picture of the stock by looking at:
- 1. Future Outlook: What are well-informed industry analysts predicting for INGA’s future growth? Take a look at our free research report of analyst consensus for INGA’s outlook.
- 2. Financial Health: Is INGA’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- 3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.