The Netherlands' ING Group (ING ) (ING), a provider of banking, insurance, and asset management to 50 million clients -- individuals, companies and institutions -- in over 50 countries, has been making inroads in America, mainly in direct and Internet banking. For U.S. rivals, ING's global reach -- and 1,600 branches -- make it an attractive target, says Don Schreiber, CEO of investment adviser Wealth Builders, which has bought shares. He calls ING an "undervalued gem -- as a value stock and a dividend play," with a 5.2% payout yield. And its stock is trading at nine times his conservative estimate of $3.25 a share for 2005 -- a ratio far below those of its peers. He figures ING, whose American depositary receipts -- now at 28.88 -- trade on the Big Board, is worth at least 33 but would fetch more in a buyout. In 2006, Schreiber sees earnings slowing to $3.20 partly because of asset sales and restructuring costs. With the elderly facing pension changes in many countries, ING's expertise in financial planning and investing will be at a premium, says Schreiber. Rahul Shah of Standard & Poor's (MHP ) in London rates ING a "four-star buy"(five is tops). ING says its direct banking unit has $164 billion under management, excluding the U.S. It has a further $30 billion from 2.6 million U.S. clients. ING spokeswoman Dorothy Hellenius says: "We continue to see sufficient potential for growth as an independent company."
Note: Unless otherwise noted, neither the sources cited in Inside Wall Street nor their firms hold positions in the stocks under discussion. Similarly, they have no investment banking or other financial relationships with them.
By Gene G. Marcial