Will Burberry Group plc’s (LSE:BRBY) Earnings Grow In The Year Ahead?
Looking at Burberry Group plc’s (LSE:BRBY) earnings update in September 2017, analyst forecasts seem in-line with its track record, as upcoming earnings growth is expected to be 4.58% next year, similar to the range of average earnings growth for the past five years of 4.44% per year. By 2018, we can expect BRBY’s bottom line to reach £300M, a jump from the current £287M. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for BRBY in the longer term. Investors wanting to learn more about other aspects of Burberry Group should research its fundamentals here. View our latest analysis for Burberry Group
How will Burberry Group perform in the near future?
Over the next three years, it seems the consensus view of the 24 analysts covering BRBY is skewed 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 get an idea of the overall earnings growth trend for BRBY, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
By 2020, BRBY’s earnings should reach £364M, from current levels of £287M, resulting in an annual growth rate of 10.94%. This leads to an EPS of £0.93 in the final year of projections relative to the current EPS of £0.65. Growth in the bottom line seems to suggest cost-cutting initiatives, since top-line is predicted to rise at a slower pace than earnings. In 2020, BRBY’s profit margin will have expanded from 10.37% to 13.03%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For Burberry Group, I’ve compiled three fundamental 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 BRBY 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 BRBY is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BRBY? 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 pass 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.