What Should Investors Know About BHP Group Plc’s (LON:BHP) Future?
In June 2018, BHP Group Plc (LON:BHP) announced its earnings update. Overall, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 46% in the upcoming year compared with the past 5-year average growth rate of -30%. Presently, with latest-twelve-month earnings at US$6.6b, we should see this growing to US$9.7b by 2019. Below is a brief commentary around BHP Group’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
Check out our latest analysis for BHP Group
Can we expect BHP Group to keep growing?
The view from 19 analysts over the next three years is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of BHP’s earnings growth over these next few years.
By 2021, BHP’s earnings should reach US$9.2b, from current levels of US$6.6b, resulting in an annual growth rate of 4.1%. EPS reaches $1.86 in the final year of forecast compared to the current $1.24 EPS today. Margins are currently sitting at 15%, which is expected to expand to 21% by 2021.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For BHP Group, I’ve compiled three essential aspects you should look at:
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 BHP 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 BHP Group is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BHP 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!
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.
