Sumitomo Mitsui Financial Group, Inc. (SMFG): Insiders Smell A Discount?

Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) has been downgraded by Macquarie on May 25 which now rates the stock as Neutral compared with Outperform rating suggested in the past. Analysts at Citigroup, shed their positive views on February 04 by lowering it fromNeutral to Sell. The stock lost favor of BofA/Merrill analysts who expressed their lack of confidence in it using a downgrade from Buy to Neutral on June 10. Credit Agricole analysts came out with bearish views on May 13 when the call was made. They think the stock is now Sell compared to to their prior call for Buy.

Sumitomo Mitsui Financial Group, Inc. (SMFG) hit an intraday high Thursday at $7.08. The shares finished at $7.06, after trading as low as $6.93 earlier in the session. It rose 0.43% in recent trade and currently has a stock-market value of $49.63B. Trading activity significantly improved as the volume at ready counter increased to 3,092,435 shares versus 1,847,760 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 1,259,742 shares. The stock is now 1.29% above against its bear-market low of $6.97 on December 06, 2018. It has retreated -36.97% since it’s 52-week high of $9.67 reached in January. Now the market price is down -13.48% on the year and down -18.76% YTD.

SMFG’s 50 day simple moving average (SMA 50) price is $7.75 and its 200-day simple moving average (SMA 200) price is $8.09. The company’s stock currently has a total float of 6.38B shares. Its weekly volatility is hovering around 1.99% and felt 1.62% volatility in price over a month. On the upside, the share price will test short term resistance at around $7.12. On a downside, the stock is likely to find some support, which begins at $6.97. The failure to get near-term support could push it to $6.87.

Wall Street’s most bullish Sumitomo Mitsui Financial Group, Inc. (NYSE:SMFG) analysts are predicting the share price to blow past $12.88 per share during the next 12 months. The current median share price forecast by them is $10.49, suggesting that the stock could increase 48.58% in that time frame. The average price target of $10.28 calls for a nearly 45.61% increase in the stock price.

When looking at valuations, Sumitomo Mitsui Financial Group, Inc. (SMFG) has a cheap P/E of 7.15x as compared to industry average of 19.02x. Moreover, it trades for 6.66 times the next 12 months of expected earnings. Also, it is trading at rather inexpensive levels at just over 0.52x price/book and 2.45x price/sales. Compared to others, Sumitomo Mitsui Financial Group, Inc. is in a different league with regards to profitability, having net margins of 34.2%. To put some perspective around this, the industry’s average net margin is 29.87%. SMFG’s ROE is 7.5%, which is also considerably worse than the industry’s ROE of 16.14%.