In June 2017, Legal & General Group Plc (LSE:LGEN) announced its latest earnings update, which indicated that the company gained from a strong tailwind, eventuating to a double-digit earnings growth of 17.02%. Below, I’ve laid out key numbers on how market analysts view Legal & General Group’s earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in. View our latest analysis for Legal & General Group
Market analysts’ consensus outlook for this coming year seems pessimistic, with earnings falling by -0.88%. Beyond this, earnings should continue to be below today’s level, with a decrease of -1.86% in 2019, eventually reaching £1,507.5M in 2020.
Although it is informative knowing the growth rate each year relative to today’s value, it may be more insightful estimating the rate at which the company is growing every year, on average. The advantage of this technique is that we can get a better picture of the direction of Legal & General Group’s earnings trajectory over the long run, irrespective of near term fluctuations, fluctuate up and down. To compute this rate, I put 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 1.64%. This means, we can assume Legal & General Group will grow its earnings by 1.64% every year for the next few years.
Next Steps:
For Legal & General Group, I’ve compiled three relevant 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 LGEN 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 LGEN is currently mispriced by the market.
3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of LGEN? 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.