Looking at BT Group plc's (LON:BT.A) earnings update in June 2019, analyst consensus outlook seem pessimistic, with profits predicted to drop by 1.5% next year. However, this outlook is not unsubstantiated given the negative past 5-year average earnings growth. With trailing-twelve-month net income at current levels of UK£2.2b, the consensus growth rate suggests that earnings will decline to UK£2.1b by 2020. Below is a brief commentary around BT Group's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.
Exciting times ahead?
The longer term view from the 17 analysts covering BT.A is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 6.9% based on the most recent earnings level of UK£2.2b to the final forecast of UK£2.4b by 2022. EPS reaches £0.24 in the final year of forecast compared to the current £0.22 EPS today. Margins are currently sitting at 9.2%, which is expected to expand to 11% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For BT Group, I've put together three fundamental factors you should further examine:
- 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 BT Group 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 BT Group is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BT Group? 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 firstname.lastname@example.org. 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.