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What Should You Know About The Future Of Banca Monte dei Paschi di Siena S.p.A.’s (BIT:BMPS)?

Simply Wall St

Banca Monte dei Paschi di Siena S.p.A.’s (BIT:BMPS) released its most recent earnings update in December 2018, which indicated that the company finally turned profitable after losses on average over the past couple of years. Below, I’ve presented key growth figures on how market analysts view Banca Monte dei Paschi di Siena’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.

View our latest analysis for Banca Monte dei Paschi di Siena

Analysts’ outlook for next year seems pessimistic, with earnings falling by -10.0%. But in the following year, there is a complete contrast in performance, with arriving at double digit 25% compared to today’s level and continues to increase to €450m in 2022.

BIT:BMPS Past and Future Earnings, March 4th 2019

Even though it is informative knowing the rate of growth each year relative to today’s value, it may be more valuable to gauge the rate at which the earnings are moving every year, on average. The benefit of this technique is that we can get a bigger picture of the direction of Banca Monte dei Paschi di Siena’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 18%. This means, we can expect Banca Monte dei Paschi di Siena will grow its earnings by 18% every year for the next few years.

Next Steps:

For Banca Monte dei Paschi di Siena, I’ve compiled three important aspects 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 BMPS 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 BMPS is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BMPS? 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.