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ING (ENXTAM:INGA) Stock Looks Reasonable On Its 280% Five Year Run

Simply Wall St · 2d ago

ING Groep has delivered a powerful share price run in recent years, which naturally raises the question of whether the current valuation is still grounded in the returns it earns on its capital. With the stock now around €31.70, the key issue is how that price lines up with the profitability the bank is generating from the equity it deploys.

  • Over the past 5 years, ING Groep has logged a total return of about 279.6%, which puts real weight on the question of whether that performance is matched by the returns generated on shareholders' capital.
  • The bank’s business model relies heavily on how efficiently it turns its balance sheet into interest income and fee revenue, which can influence both the level and durability of the returns it earns on its capital.
  • If you'd rather focus on earnings, this one's for you. See what ING Groep's 10.4x P/E says about the price.

For investors, the debate is whether ING Groep's current share price fairly reflects the returns it earns on its capital today and what that implies for the years ahead.

If you want more context on whether ING Groep's capital returns justify its share price, it can help to compare it with other stocks screened by the same lens using 171 high quality undervalued stocks.

Is ING Groep Still Cheap on Excess Returns?

The Excess Returns model looks at how much profit ING Groep can generate over and above the return that shareholders require. At the current price of €31.70, this approach points to the bank creating value on each euro of equity, rather than just treading water.

Book Value is estimated at €17.57 per share and Stable EPS at €2.93 per share, with an Average Return on Equity of 15.31%. Against a Cost of Equity of €1.22 per share, that leaves an Excess Return of €1.71 per share. On this basis, the model assumes ING Groep keeps reinvesting capital at a rate that is meaningfully above its hurdle rate.

The framework also includes a Stable Book Value of €19.12 per share, which reflects analyst expectations for the balance sheet to continue compounding rather than shrinking. Taken together, those inputs lead the Excess Returns projections to put ING Groep's estimated intrinsic value substantially above the current share price. Find out what ING Groep could be worth using our Excess Returns estimate.

The ING Groep Narrative: What Would Justify Today's Price?

Simply Wall St Narratives pick up where this valuation puzzle for ING Groep leaves off and outline which future paths for growth, margins and earnings would need to occur for the stock to be worth meaningfully more or less than today’s price. All of this is hosted on the company’s Community page. Each narrative links its number to a clear view on how ING Groep's growth, profitability profile and key risks could evolve, which you can revisit as fresh information emerges.

Community views on ING Groep are split between those who see solid progress being fairly reflected in the price and those who think expectations now carry more execution risk.

Bull case: roughly fairly valued

"Additionally, ING is among the sector leaders when it comes to trying to pivot away from NII as the predominant factor of profits…"

Discover why this Narrative puts ING Groep at roughly fairly valued.

Bear case: 27% overvalued

"Heavy use of excess capital for dividends and share buybacks, including €12.5b of additional distributions over three years, can constrain future balance sheet flexibility…"

Explore why this Narrative puts ING Groep at 27% overvalued.

One more ING Groep check that belongs beside the share price

All the ratios in the world still sit on top of one question: who is steering ING Groep and how their rewards line up with your interests as a shareholder. See who runs ING Groep and how they are paid.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.