ING - ING Groep: Low Valuation Decent Growth Solid Yield And A Bullish Chart.

Summary

• The fundamental and technical signs favor the bulls on ING Groep.
• Despite macro uncertainty and an underperforming Netherlands market, the major banking stock appears poised for more upside.
• I outline some positive valuation, growth, and yield fundamentals on the stock and outline key price levels to watch on the chart.

While European equities have beaten the S&P 500 so far in 2022, the year-to-date return on the iShares MSCI Netherlands ETF ( EWN ) is sharply lower on a relative basis to domestic equities. One major bank domiciled in the Netherlands features a much better return lately along with encouraging fundamentals and technicals. Let's see why that's the case on ING.

EWN: Netherlands Down More Than 20% in 2022

According to Bank of America Global Research, ING Groep (ING) is a global financial institution (Dutch origin), offering banking services. Following the sale of its remaining stakes in insurance operations, ING will become a pure bank with a European retail focus combined with a global Commercial Banking activity.

The Netherlands-based $44.9 billion market cap Banks industry company within the Financials sector trades at a low 12.0 forward operating price-to-earnings ratio and pays a high 8.0% dividend yield, according to The Wall Street Journal . Seeking Alpha shows a last-12-month yield of just 4.9%, though.

Back in November, ING reported Q3 net income that was down more than 28% year-on-year while net interest income, important for banks, fell just 1.7% from the same period in 2021. The good news was that core deposits growth was €10.5 billion in the third quarter and core lending growth was €4.7 billion. What's more, the management team announced a share buyback program that lasts until the end of the year. Any remaining amount will be paid out in cash to shareholders on January 16, 2023. BofA notes that ING has improving operating leverage, and with a recent acceleration in net interest income and a material share buyback, there's solid progress that shareholders should like.

On valuation, analysts at BofA see earnings having dipped in 2022, but a solid recovery is expected in ING's FY 2023 and '24. As for the ADR that U.S. investors can more easily trade, per-share profits are also seen as being on the mend along with a growing dividend. Using forward estimates, the P/E is seen as falling into the single digits while the stock's price-to-book ratio is attractive, under 0.8x.

Overall, I like the yield and valuation given the expected growth rate. Still, there are risks considering a weak Euro Area economy next year as well as the chance of rising tensions with the conflict in Ukraine.

ING: Earnings, Valuation, Dividend Forecasts

Looking ahead, corporate event data from Wall Street Horizon show a confirmed Q4 2022 earnings date of Thursday, February 2. Before that, the stock repurchase plan ends on December 30 while a shareholder meeting takes place on Monday, April 24.

Corporate Event Calendar

The Technical Take

With a solid growth outlook, low valuation, and shareholder accretive activities, does the chart line up with the bullish thesis? I think so. Notice in the chart below that ING hovers near its highest level since February. Back then, shares plunged around Russia's invasion of Ukraine and dismal Euro Area GDP growth forecasts shifts.

Now, though, despite rate volatility, the stock has rallied some 50%, above important support/resistance just above $11. I think the stock can rise further to around $14. What's key, however, is that the stock is above its 50 and 200-day moving averages, and the 200-day is now upward-sloping - a positive trend signal. On the bearish side, there's some negative divergence on the RSI indicator, but those often resolve upward in time - something to watch.

ING: Shares Breakout, Moving Averages Trending Better

The Bottom Line

I like the potential trend reversal on ING along with its fundamental valuation, growth, and total yield story.

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