Yahoo Finance What Should Investors Know About Bovis Homes Group PLC's (LON:BVS) Earnings Trajectory?
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Bovis Homes Group PLC's (LON:BVS) most recent earnings update in April 2019 revealed that the business benefited from a strong tailwind, eventuating to a double-digit earnings growth of 50%. Below is my commentary, albeit very simple and high-level, on how market analysts view Bovis Homes Group's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
View our latest analysis for Bovis Homes Group
Analysts' expectations for this coming year seems optimistic, with earnings expanding by a robust 12%. This growth seems to continue into the following year with rates reaching double digit 23% compared to today’s earnings, and finally hitting UK£173m by 2022.
While it’s informative understanding the growth rate year by year relative to today’s level, it may be more valuable to evaluate the rate at which the business is growing every year, on average. The benefit of this technique is that we can get a better picture of the direction of Bovis Homes Group's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 8.1%. This means that, we can presume Bovis Homes Group will grow its earnings by 8.1% every year for the next couple of years.
Next Steps:
For Bovis Homes Group, there are three relevant aspects you should look at:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is BVS worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether BVS is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BVS? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
