The Berkeley Group Holdings plc's (LON:BKG) most recent earnings announcement in August 2019 revealed that the business faced a major headwind with earnings falling by -21%. Below, I've laid out key numbers on how market analysts view Berkeley Group Holdings's earnings growth trajectory over the next couple of years and whether the future looks brighter. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.
Analysts' outlook for the upcoming year seems pessimistic, with earnings decreasing by a double-digit -29%. Beyond this, earnings should continue to be below today's level, with a decline of -25% in 2021, eventually reaching UK£469m in 2022.
Although it’s informative knowing the growth each year relative to today’s figure, it may be more insightful evaluating the rate at which the company is moving on average every year. The benefit of this technique is that we can get a bigger picture of the direction of Berkeley Group Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is -6.7%. This means that, we can assume Berkeley Group Holdings will chip away at a rate of -6.7% every year for the next couple of years.
For Berkeley Group Holdings, there are three relevant factors you should further research:
- 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.
- Valuation: What is BKG 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 BKG is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BKG? 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 firstname.lastname@example.org. 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.