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What Should We Expect From BBA Aviation plc’s (LON:BBA) Earnings Over The Next Year?

Since BBA Aviation plc (LON:BBA) released its earnings in June 2018, analysts seem fairly confident, as a 27% increase in profits is expected in the upcoming year, relative to the past 5-year average growth rate of -8.8%. By 2019, we can expect BBA Aviation’s bottom line to reach US$156m, a jump from the current trailing-twelve-month US$123m. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for BBA Aviation in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

See our latest analysis for BBA Aviation

How is BBA Aviation going to perform in the near future?

The longer term view from the 4 analysts covering BBA 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. 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.

LSE:BBA Future Profit November 14th 18

This results in an annual growth rate of 13% based on the most recent earnings level of US$142m to the final forecast of US$216m by 2021. EPS reaches $0.17 in the final year of forecast compared to the current $0.14 EPS today. The main reason for growth is a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. In 2021, BBA’s profit margin will have expanded from 6.0% to 8.5%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For BBA Aviation, I’ve put together three important factors 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 BBA Aviation 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 BBA Aviation is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BBA Aviation? 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.