Market Chatter: Higher Bancassurance Sales Drive 40% Revenue Jump for Four Korean Banks

Whether it's through stocks, bonds, ETFs, or other types of securities, all investors love seeing their portfolios score big returns. But when you're an income investor, your primary focus is generating consistent cash flow from each of your liquid investments.

While cash flow can come from bond interest or interest from other types of investments, income investors hone in on dividends. A dividend is the distribution of a company's earnings paid out to shareholders; it's often viewed by its dividend yield, a metric that measures a dividend as a percent of the current stock price. Many academic studies show that dividends account for significant portions of long-term returns, with dividend contributions exceeding one-third of total returns in many cases.

Woori Bank in Focus

Woori Bank (WF) is headquartered in Seoul, and is in the Finance sector. The stock has seen a price change of 12.64% since the start of the year. The company is paying out a dividend of $0.3 per share at the moment, with a dividend yield of 3.57% compared to the Banks - Foreign industry's yield of 4.05% and the S&P 500's yield of 1.47%.

Taking a look at the company's dividend growth, its current annualized dividend of $1.21 is up 89.7% from last year. In the past five-year period, Woori Bank has increased its dividend 2 times on a year-over-year basis for an average annual increase of 0.61%. Future dividend growth will depend on earnings growth as well as payout ratio, which is the proportion of a company's annual earnings per share that it pays out as a dividend. Right now, Woori Bank's payout ratio is 16%, which means it paid out 16% of its trailing 12-month EPS as dividend.

Looking at this fiscal year, WF expects solid earnings growth. The Zacks Consensus Estimate for 2024 is $8.59 per share, with earnings expected to increase 15.77% from the year ago period.

Bottom Line

Investors like dividends for many reasons; they greatly improve stock investing profits, decrease overall portfolio risk, and carry tax advantages, among others. However, not all companies offer a quarterly payout.

For instance, it's a rare occurrence when a tech start-up or big growth business offers their shareholders a dividend. It's more common to see larger companies with more established profits give out dividends. Income investors must be conscious of the fact that high-yielding stocks tend to struggle during periods of rising interest rates. With that in mind, WF presents a compelling investment opportunity; it's not only an attractive dividend play, but the stock also boasts a strong Zacks Rank of #2 (Buy).

Zacks Investment Research

Asian equities traded in the US as American depositary receipts were rising sharply Friday morning, climbing 1.22% to 2,076.32 on the S&P Asia 50 ADR Index, but were still down 1% for the week.

From North Asia, the gainers were led by computer hardware maker Canaan and ecommerce fashion platform MOGU , which advanced 12% and 5%, respectively. They were followed by solar panel maker JinkoSolar and financial services company Shinhan Financial Group , which rose 4.7% each.

The decliners from North Asia were led by mobile big data platform Aurora Mobile and automotive ecommerce platform TuanChe , which fell 8.8% and 5.2%, respectively. They were followed by education company Four Seasons Education and online entertainment platform iQIYI , which dropped 4.2% and 3.1%, respectively.

From South Asia, the gainers were led by tech conglomerate Sea and telecommunications operator PLDT , which increased 2.4% and 1.6%, respectively. They were followed by pharmaceutical company Dr. Reddy's Laboratories and IT firm Infosys , which were up 0.9% and 0.4%, respectively.

The only decliners from South Asia were IT firm Sify Technologies and telecommunications operator Telekomunikasi Indonesia , which were down 1.9% and 0.4%, respectively.

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Shinhan Financial Group Co (SHG). SHG is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 5.73, while its industry has an average P/E of 9.06. Over the past 52 weeks, SHG's Forward P/E has been as high as 6.79 and as low as 3.67, with a median of 5.32.

We also note that SHG holds a PEG ratio of 0.63. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. SHG's industry currently sports an average PEG of 0.70. SHG's PEG has been as high as 1.40 and as low as 0.53, with a median of 0.68, all within the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SHG has a P/S ratio of 0.75. This compares to its industry's average P/S of 1.2.

Finally, investors should note that SHG has a P/CF ratio of 4.72. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. SHG's current P/CF looks attractive when compared to its industry's average P/CF of 13.93. Over the past year, SHG's P/CF has been as high as 5.19 and as low as 3.34, with a median of 4.05.

These are only a few of the key metrics included in Shinhan Financial Group Co's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, SHG looks like an impressive value stock at the moment.

Zacks Investment Research

Investors interested in Banks - Foreign stocks are likely familiar with Shinhan Financial (SHG) and Erste Group Bank AG (EBKDY). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Shinhan Financial and Erste Group Bank AG are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that SHG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

SHG currently has a forward P/E ratio of 6.40, while EBKDY has a forward P/E of 6.49. We also note that SHG has a PEG ratio of 0.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EBKDY currently has a PEG ratio of 0.99.

Another notable valuation metric for SHG is its P/B ratio of 0.51. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EBKDY has a P/B of 0.72.

These metrics, and several others, help SHG earn a Value grade of B, while EBKDY has been given a Value grade of D.

SHG is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SHG is likely the superior value option right now.

Zacks Investment Research