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Bayerische Motoren Werke Aktiengesellschaft's (FRA:BMW) released its most recent earnings update in December 2018, which suggested that the business endured a significant headwind with earnings deteriorating by -17%. Investors may find it useful to understand how market analysts view Bayerische Motoren Werke's earnings growth trajectory over the next couple of years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Analysts' outlook for the coming year seems pessimistic, with earnings reducing by -8.7%. Beyond this, earnings are predicted to continue to be below today's level, with a decline of -5.4% in 2021, eventually reaching €6.8b in 2022.
Although it’s informative knowing the growth rate each year relative to today’s value, it may be more insightful to evaluate the rate at which the earnings are growing on average every year. The pro of this method is that we can get a bigger picture of the direction of Bayerische Motoren Werke's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -0.8%. This means that, we can assume Bayerische Motoren Werke will chip away at a rate of -0.8% every year for the next few years.
For Bayerische Motoren Werke, I've compiled three key aspects 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 BMW 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 BMW is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BMW? 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.