B&M European Value Retail SA (LSE:BME): Immense Growth Potential?
Based on B&M European Value Retail SA’s (LSE:BME) earnings update in September 2017, analyst consensus outlook appear cautiously optimistic, with earnings expected to grow by 24.02% in the upcoming year, though this is comparatively lower than the historical 5-year average earnings growth of 36.14%. With net income at current levels of £142.9M, we should see this rise to £177.3M in 2018. Below is a brief commentary on the longer term outlook the market has for BME. Investors wanting to learn more about other aspects of B&M European Value Retail should research its fundamentals here. See our latest analysis for BME
How is BME going to perform in the near future?
The 13 analysts covering BME view its longer term outlook with a positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for BME, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.
This results in an annual growth rate of 15.18% based on the most recent earnings level of £142.9M to the final forecast of £239.6M by 2020. This leads to an EPS of £0.23 in the final year of projections relative to the current EPS of £0.14. Growth in earnings appears to be a result of reduction in costs rather than purely top-line expansion as earnings is increasing at a faster rate. Margins is currently sitting at 5.88%, which is expected to expand to 6.61% by 2020.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For B&M European Value Retail, I’ve put together three key aspects you should further examine:
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 BME 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 BME is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of BME? 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 pass 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.
