Will Banco Santander SA.’s (BME:SAN) Earnings Grow In The Years Ahead?
In December 2017, Banco Santander SA. (BME:SAN) released its most recent earnings announcement, which confirmed that the business benefited from a small tailwind, eventuating to a single-digit earnings growth of 6.03%. Below is my commentary, albeit very simple and high-level, on how market analysts predict Banco Santander’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. View our latest analysis for Banco Santander
Analysts’ expectations for this coming year seems buoyant, with earnings increasing by a robust 30.58%. This growth seems to continue into the following year with rates arriving at double digit 41.73% compared to today’s earnings, and finally hitting €9.99B by 2021.
Although it’s helpful to be aware of the growth year by year relative to today’s value, it may be more beneficial estimating the rate at which the company is moving every year, on average. The benefit of this approach is that we can get a better picture of the direction of Banco Santander’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 put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 14.64%. This means that, we can expect Banco Santander will grow its earnings by 14.64% every year for the next couple of years.
Next Steps:
For Banco Santander, I’ve compiled three relevant aspects 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 SAN 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 SAN is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SAN? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
