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Since BHP Group (ASX:BHP) released its earnings in June 2018, it seems that analyst forecasts are fairly optimistic, with earnings expected to grow by 45% in the upcoming year relative to the past 5-year average growth rate of -30%. Currently with trailing-twelve-month earnings of US$6.6b, we can expect this to reach US$9.6b by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
How is BHP Group going to perform in the near future?
The longer term expectations from the 25 analysts of BHP is tilted 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.
By 2022, BHP’s earnings should reach US$8.7b, from current levels of US$6.6b, resulting in an annual growth rate of 2.5%. This leads to an EPS of $1.8 in the final year of projections relative to the current EPS of $1.24. Margins are currently sitting at 15%, which is expected to expand to 21% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For BHP Group, I’ve put together three essential factors you should further examine:
- 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!
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. On rare occasion, data errors may occur. Thank you for reading.