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The latest earnings release ING Groep N.V.’s (AMS:INGA) announced in December 2018 showed that the company endured a minor headwind with earnings deteriorating from €4.9b to €4.7b, a change of -4.1%. Below, I’ve laid out key numbers on how market analysts perceive ING Groep’s earnings growth outlook over the next couple of years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ prospects for the coming year seems buoyant, with earnings climbing by a robust 11%. This growth seems to continue into the following year with rates reaching double digit 17% compared to today’s earnings, and finally hitting €5.7b by 2022.
While it’s useful to be aware of the growth year by year relative to today’s figure, it may be more valuable to estimate the rate at which the earnings are growing every year, on average. The benefit of this approach is that it ignores near term flucuations and accounts for the overarching direction of ING Groep’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 5.8%. This means, we can presume ING Groep will grow its earnings by 5.8% every year for the next few years.
For ING Groep, there are three important aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is INGA worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether INGA is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of INGA? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.