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BT Group plc (LON:BT.A): Earnings Expected To Remain Subdued

Simply Wall St

Since BT Group plc (LON:BT.A) released its earnings in December 2018, analyst forecasts seem pessimistic, with earnings expected to decline by -6.7% in the upcoming year. However, this pessimism is not unsubstantiated given the negative earnings growth rate over the past five years on average. Currently with a trailing-twelve-month profit of UK£2.0b, the consensus growth rate suggests that earnings will drop to UK£1.9b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for BT Group in the longer 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 BT Group

How is BT Group going to perform in the near future?

The longer term view from the 20 analysts covering BT.A is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To understand the overall trajectory of BT.A’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:BT.A Past and Future Earnings, March 15th 2019

From the current net income level of UK£2.0b and the final forecast of UK£2.1b by 2022, the annual rate of growth for BT.A’s earnings is 7.2%. This leads to an EPS of £0.25 in the final year of projections relative to the current EPS of £0.21. Margins are currently sitting at 8.6%, which is expected to expand to 9.0% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For BT Group, there are three essential aspects 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 BT Group 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 BT Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BT Group? 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.