The financial sector is flourishing, driven by global rate cuts, increased capital investments, AI-driven efficiencies, and opportunities in fixed-income assets, all benefiting foreign banks. Their diversification, crucial role in financing infrastructure, and adaptability to evolving markets position them as resilient and appealing investment options amid innovation and economic shifts.
Therefore, investors might consider fundamentally strong financial stocks like Deutsche Bank Aktiengesellschaft (DB), Woori Financial Group Inc. (WF), and Barclays PLC (BCS), which offer attractive valuations.
Banks are embracing AI and automation to boost efficiency and transform traditional models for greater productivity. Additionally, easing regulations are driving global mergers, acquisitions, and IPOs, creating lucrative opportunities for foreign financial institutions. According to Statista, the global finance market’s revenue is expected to grow at a CAGR of 9.1%, reaching $2.89 billion by 2029.
Moreover, foreign banks are well-positioned to capitalize on global political and economic shifts, offering valuable diversification for investors. Meanwhile, the financial sector is benefiting from increased internet access, technological advancements, and smart risk management. The growing consumer preference for digital banking, payments, and investing is further driving the sector’s expansion.
Considering these conducive trends, let’s analyze the fundamental aspects of the three Foreign Banks picks, starting with number three.
Stock #3: Deutsche Bank Aktiengesellschaft (DB)
Headquartered in Frankfurt am Main, Germany, DB is a stock corporation offering corporate and investment banking, along with asset management products and services, to private individuals, corporate entities, and institutional clients worldwide. It operates through its Corporate Bank, Investment Bank, Private Bank, and Asset Management segments.
In terms of forward Price/Sales, DB is trading at 1.05x, which is 68% lower than the 3.27x industry average.
DB’s total net revenues for the fiscal third quarter ended September 30, 2024, increased 1.3% year-over-year to €7.50 billion ($7.88 billion). The company’s profit attributable to shareholders rose 41.7% from the prior-year quarter to €1.46 billion ($1.53 billion). Additionally, its EPS reached €0.81, marking a 44.6% year-over-year increase.
Street expects DB’s revenue for the quarter ending December 31, 2024, to increase 4.2% year-over-year, reaching $7.54 billion. Over the past year, the stock has gained 38.1% to close the last trading session at $17.08.
DB’s POWR Ratings reflect its bright prospects. It has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
DB has a B grade for Value and Stability. It is ranked #11 out of 90 stocks in the Foreign Banks industry. To access the additional ratings of DB for Growth, Momentum, Sentiment, and Quality, click here.
Stock #2: Woori Financial Group Inc. (WF)
Headquartered in Seoul, South Korea, WF is a financial holding company that operates as a commercial bank providing a range of financial products and services to individuals, corporations, and small- and medium-sized enterprises in Korea. It operates through Banking, Credit Card, Capital, Investment Banking, and Other segments.
In terms of forward non-GAAP P/E, WF’s 4.16x is 69.3% lower than the 13.51x industry average. Likewise, its 1.19x forward Price/Sales is 63.7% lower than the 3.27x industry average. Moreover, its 0.37x forward non-GAAP PEG is 74.9% lower than the 1.48x industry average.
WF’s net operating revenue for the nine months ended September 30, 2024, increased by 6.6% year-over-year to KRW7.99 trillion ($5.69 billion). The company’s operating income rose to KRW3.58 trillion ($2.55 billion), up 6.4% from the prior-year period. Moreover, WF’s net income grew by 9.1% year-over-year, reaching KRW2.72 trillion ($1.93 billion).
Analysts expect WF’s EPS and revenue for the quarter ending December 31, 2024, to increase 284.9% and 4.3% year-over-year to $1.13 and $1.84 billion, respectively. It surpassed the consensus EPS estimates in three of the trailing four quarters. Over the past year, WF’s stock has gained 19.5% to close the last trading session at $35.86.
WF’s POWR Ratings reflect strong prospects. It has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Momentum and a B for Value, Stability, and Sentiment. It is ranked #5 in the same industry. Beyond what we stated above, we also have given WF grades for Growth and Quality. Get all of WF’s ratings here.
Stock #1: Barclays PLC (BCS)
Headquartered in London, United Kingdom, BCS provides various financial services across the United Kingdom, Europe, the Americas, Africa, the Middle East, and Asia. The company operates through its Barclays UK and Barclays International divisions.
In terms of forward Price/Sales, BCS’ 1.46x is 55.2% lower than the 3.27x industry average.
For the fiscal third quarter that ended on September 30, 2024, BCS’ total income stood at £6.55 billion ($8.30 billion), up 4.6% year-over-year. Additionally, its attributable profit and earnings per ordinary share increased 22.8% and 28.9%, respectively, from the prior-year, reaching £1.56 billion ($1.98 billion) and 10.70p.
For the quarter ending December 31, 2024, BCS’ revenue is expected to increase 7.4% year-over-year to $7.59 billion. Its EPS for fiscal 2024 is expected to rise 8.6% year-over-year to $1.47. The stock has gained 85% over the past year to close the last trading session at $13.36.
BCS’ POWR Ratings reflect a favorable outlook. It has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
It has a B grade for Growth, Value, and Sentiment. It is ranked first in the Foreign Banks industry. To see BCS’ Momentum, Stability, and Quality ratings, click here.
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BCS shares were trading at $13.52 per share on Tuesday morning, up $0.16 (+1.20%). Year-to-date, BCS has gained 79.17%, versus a 28.16% rise in the benchmark S&P 500 index during the same period.
About the Author: Abhishek Bhuyan
Abhishek embarked on his professional journey as a financial journalist due to his keen interest in discerning the fundamental factors that influence the future performance of financial instruments.
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