Looking at BAE Systems plc's (LON:BA.) earnings update in June 2019, analyst consensus outlook appear cautiously subdued, as a 0.4% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 13%. By 2020, we can expect BAE Systems’s bottom line to reach UK£1.0b, a jump from the current trailing-twelve-month of UK£1.0b. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for BAE Systems in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How will BAE Systems perform in the near future?
Longer term expectations from the 13 analysts covering BA.’s stock is one of positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To get an idea of the overall earnings growth trend for BA., I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2022, BA.'s earnings should reach UK£1.1b, from current levels of UK£1.0b, resulting in an annual growth rate of 5.6%. EPS reaches £0.47 in the final year of forecast compared to the current £0.31 EPS today. However, the near term margins may change heading into 2022, from the current levels of 5.9% to 5.3%.
Future outlook is only one aspect when you're building an investment case for a stock. For BAE Systems, there are three essential factors 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 BAE Systems 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 BAE Systems is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BAE Systems? 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 email@example.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.