In December 2018, UBS Group AG (VTX:UBSG) announced its latest earnings update, which showed that the company gained from a significant tailwind, more than doubling its earnings from the prior year. Below is my commentary, albeit very simple and high-level, on how market analysts perceive UBS Group’s earnings growth trajectory over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts’ prospects for next year seems rather subdued, with earnings expanding by a single digit 0.8%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 20% compared to today’s earnings, and finally hitting US$5.4b by 2022.
Although it’s informative understanding the rate of growth year by year relative to today’s value, it may be more insightful to determine the rate at which the earnings are growing every year, on average. The pro of this method is that we can get a bigger picture of the direction of UBS Group’s earnings trajectory over the long run, irrespective of near term fluctuations, be more volatile. 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 7.4%. This means that, we can presume UBS Group will grow its earnings by 7.4% every year for the next couple of years.
For UBS Group, I’ve put together three fundamental factors 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 UBSG 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 UBSG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of UBSG? 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.