Bankia SA (BME:BKIA): Immense Growth Potential?
In June 2018, Bankia SA (BME:BKIA) released its earnings update. Generally, it seems that analyst forecasts are substantially optimistic, as a 80.7% rise in profits is expected in the upcoming year, against the historical 5-year average growth rate of 53.3%. Presently, with latest-twelve-month earnings at €489.5m, we should see this growing to €884.7m by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Bankia 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 Bankia
Exciting times ahead?
Longer term expectations from the 18 analysts covering BKIA’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. 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 BKIA’s earnings growth over these next few years.
From the current net income level of €504.5m and the final forecast of €1.17b by 2021, the annual rate of growth for BKIA’s earnings is 12.0%. EPS reaches €0.37 in the final year of forecast compared to the current €0.18 EPS today. The bottom-line growth seems to be caused by cost cutting activities, as revenues is expected to grow much slower than earnings. In 2021, BKIA’s profit margin will have expanded from 19.2% to 32.6%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Bankia, I’ve compiled three pertinent 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 Bankia 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 Bankia is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bankia? 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.
