BB&T Corporation’s (NYSE:BBT) most recent earnings update in December 2018 confirmed that the company benefited from a robust tailwind, leading to a double-digit earnings growth of 38%. Below is a brief commentary on my key takeaways on how market analysts perceive BB&T’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.
Market analysts’ consensus outlook for the coming year seems rather muted, with earnings growing by a single digit 6.2%. The growth outlook in the following year seems much more buoyant with rates reaching double digit 11% compared to today’s earnings, and finally hitting US$3.4b by 2022.
Even though it is informative knowing the growth rate year by year relative to today’s level, it may be more valuable to evaluate the rate at which the company is growing on average every year. The advantage of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of BB&T’s earnings trajectory over time, which may be more relevant for long term investors. To calculate 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 4.7%. This means, we can anticipate BB&T will grow its earnings by 4.7% every year for the next couple of years.
For BB&T, 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 BBT 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 BBT is currently mispriced by the market.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BBT? 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 email@example.com. 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.