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Bank of Queensland Limited (ASX:BOQ): Immense Growth Potential?

After Bank of Queensland Limited’s (ASX:BOQ) earnings announcement in August 2018, it seems that analyst expectations are fairly bearish, as a 9.0% rise in profits is expected in the upcoming year, against the higher past 5-year average growth rate of 11%. With trailing-twelve-month net income at current levels of AU$336m, we should see this rise to AU$366m in 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Bank of Queensland in the longer term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for Bank of Queensland

Exciting times ahead?

The 13 analysts covering BOQ view its longer term outlook with a positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of BOQ’s earnings growth over these next few years.

ASX:BOQ Future Profit December 13th 18

This results in an annual growth rate of 3.7% based on the most recent earnings level of AU$336m to the final forecast of AU$374m by 2021. This leads to an EPS of A$0.90 in the final year of projections relative to the current EPS of A$0.85. With a current profit margin of 31%, this movement will result in a margin of 32% by 2021.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Bank of Queensland, I’ve put together three important factors you should further research:

  1. 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.
  2. Valuation: What is Bank of Queensland 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 Bank of Queensland is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bank of Queensland? 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 past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.