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Bouygues SA (EPA:EN): Earnings Growth Remains Elusive

Simply Wall St

In March 2019, Bouygues SA (EPA:EN) released its earnings update. Generally, analyst forecasts seem pessimistic, with profits predicted to drop by 12% next year relative to the past 5-year average growth rate of 43%. Presently, with latest-twelve-month earnings at €1.3b, we should see this fall to €1.2b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

Check out our latest analysis for Bouygues

Exciting times ahead?

The longer term expectations from the 15 analysts of EN is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.

ENXTPA:EN Past and Future Earnings, August 28th 2019

By 2022, EN's earnings should reach €1.5b, from current levels of €1.3b, resulting in an annual growth rate of 9.8%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of €3.55 in the final year of forecast compared to the current €3.57 EPS today. Margins are currently sitting at 3.7%, which is expected to expand to 3.9% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For Bouygues, there are three pertinent aspects you should further examine:

  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 Bouygues 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 Bouygues is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Bouygues? 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 editorial-team@simplywallst.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.