As BBA Aviation plc (LON:BBA) released its earnings announcement on 31 December 2018, analyst consensus outlook appear cautiously optimistic, with profits predicted to increase by 39% next year compared with the past 5-year average growth rate of -6.3%. Presently, with latest-twelve-month earnings at US$118m, we should see this growing to US$165m by 2020. Below is a brief commentary on the longer term outlook the market has for BBA Aviation. For those interested in more of an analysis of the company, you can research its fundamentals here.
Can we expect BBA Aviation to keep growing?
Over the next three years, it seems the consensus view of the 6 analysts covering BBA is skewed towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly 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 13% based on the most recent earnings level of US$118m to the final forecast of US$195m by 2022. EPS reaches $0.20 in the final year of forecast compared to the current $0.11 EPS today. Margins are currently sitting at 5.0%, which is expected to expand to 6.7% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For BBA Aviation, I've put together three key aspects you should further research:
- 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 BBA Aviation 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 BBA Aviation is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BBA Aviation? 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.