Based on the latest analyst predictions ING Groep NV (NYSE:ING) is estimated to grow its earnings 11.7% over the next year. What should potential investors be aware of? Today I will look at the latest data and investigate into the future of this stock in more detail. See our latest analysis for ING
How is ING going to perform in the future?
Based on analysts estimates ING’s earnings are to grow 23.9% over the next 3 years. That means that we can be expecting the EPS to grow to €1.46 levels.
In the same period we are supposed to see the revenue grow from €16.52 Billion to €18.97 Billion in 2020 and profits (net income) are predicted to slightly grow from €4,651 M to €5,897 M in 2020, roughly growing 1.3x. Margins are predicted to be extremely healthy during this time as well.
Is there basis for future growth?ING Groep N.V has underperformed the average growth in earnings of the Banks industry over the past year.
Whilst ING’s Return on Equity of 8.7% isn’t horrific, it means that the company has underperformed the Banks industry average of 9.28%. This is expected to slightly improve with analysts expecting ROE in 3 years to be 9.6%.
Return on equity (ROE) is a measure of how much profit (net income) a company makes as a percentage of the shareholders equity. Equity is made up of funds from the original issuing of shares and any retained earnings from previous financial years. It varies considerably across sectors, for this reason it is important to asses a stocks ROE relative to its industry. Whilst it is true that the higher the ROE the better the company is performing, ROE does have a weakness. A stock with a disproportionate amount of debt can lead to a small equity base. Thus, a small amount of net income (the numerator) could still produce a high ROE off a modest equity base (the denominator). For this reason investors should always consider the debt situation in conjunction with ROE.
While ING Groep N.V is not a fast growing company, it can still offer very interesting investment opportunities. I recommend you see our latest FREE analysis to find out!
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