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What Do Investors Need To Know About The Future Of BankUnited, Inc.'s (NYSE:BKU)?

Simply Wall St

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In December 2018, BankUnited, Inc. (NYSE:BKU) released its earnings update. Generally, analyst consensus outlook appear pessimistic, with profits predicted to drop by -12% next year against the past 5-year average growth rate of 25%. Presently, with latest-twelve-month earnings at US$312m, we should see this fall to US$273m by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for BankUnited in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for BankUnited

How will BankUnited perform in the near future?

Longer term expectations from the 12 analysts covering BKU’s stock is one of negative sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of BKU's earnings growth over these next fews years, I've fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

NYSE:BKU Past and Future Earnings, April 5th 2019

This results in an annual growth rate of -0.8% based on the most recent earnings level of US$312m to the final forecast of US$304m by 2022. However, if we exclude extraordinary items from earnings, we see that the profits is predicted to rise over time, resulting in an EPS of $3.46 in the final year of forecast compared to the current $3.01 EPS today. The primary reason for earnings contraction is due to a falling top-line, with negative growth of -5.3%. With a current profit margin of 27%, this movement will result in a margin of 30% by 2022.

Next Steps:

Future outlook is only one aspect when you're building an investment case for a stock. For BankUnited, there are three key aspects you should look at:

  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 BankUnited 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 BankUnited is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BankUnited? 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.