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What Should We Expect From RSA Insurance Group plc’s (LON:RSA) Earnings Over The Next Year?

Simply Wall St

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On 31 December 2018, RSA Insurance Group plc (LON:RSA) released its earnings update. Generally, analysts seem cautiously optimistic, with profits predicted to increase by 43% next year, though this is comparatively lower than the historical 5-year average earnings growth of 71%. By 2020, we can expect RSA Insurance Group’s bottom line to reach UK£465m, a jump from the current trailing-twelve-month of UK£326m. Below is a brief commentary on the longer term outlook the market has for RSA Insurance Group. For those keen to understand more about other aspects of the company, you can research its fundamentals here.

View our latest analysis for RSA Insurance Group

Exciting times ahead?

Over the next three years, it seems the consensus view of the 10 analysts covering RSA 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 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:RSA Past and Future Earnings, March 26th 2019

By 2022, RSA’s earnings should reach UK£531m, from current levels of UK£326m, resulting in an annual growth rate of 13%. This leads to an EPS of £0.52 in the final year of projections relative to the current EPS of £0.32. Margins are currently sitting at 4.6%, which is expected to expand to 8.0% by 2022.

Next Steps:

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