In December 2018, Banco Bilbao Vizcaya Argentaria, S.A. (BME:BBVA) released its earnings update. Generally, analyst consensus outlook appear bearish, with earnings expected to decline by -10% in the upcoming year relative to the past 5-year average growth rate of 33%. Currently with a trailing-twelve-month profit of €5.0b, the consensus growth rate suggests that earnings will drop to €4.5b by 2020. In this article, I've outline a few earnings growth rates to give you a sense of the market sentiment for Banco Bilbao Vizcaya Argentaria in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.
How is Banco Bilbao Vizcaya Argentaria going to perform in the near future?
Longer term expectations from the 21 analysts covering BBVA’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. 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 BBVA's earnings growth over these next few years.
This results in an annual growth rate of -1.0% based on the most recent earnings level of €5.0b to the final forecast of €4.8b by 2022. EPS reaches €0.70 in the final year of forecast compared to the current €0.76 EPS today. The main reason for BBVA’s earnings contraction is top-line expansion of 6.0%, which is predicted to lag cost growth leading up to 2022. Furthermore, the current 24% margin is expected to contract to 19% by the end of 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Banco Bilbao Vizcaya Argentaria, there are three essential aspects 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 Banco Bilbao Vizcaya Argentaria 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 Banco Bilbao Vizcaya Argentaria is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Banco Bilbao Vizcaya Argentaria? 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 email@example.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.