Banca Monte dei Paschi di Siena S.p.A. (BIT:BMPS): Poised For Long Term Success?

Looking at Banca Monte dei Paschi di Siena S.p.A.’s (BIT:BMPS) earnings update on 31 December 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by -29% in the upcoming year compared with the higher past 5-year average growth rate of 5.4%. Presently, with latest-twelve-month earnings at €344m, we should see this growing to €244m by 2020. Below is a brief commentary around Banca Monte dei Paschi di Siena’s earnings outlook going forward, which may give you a sense of market sentiment for the company. For those interested in more of an analysis of the company, you can research its fundamentals here.

View our latest analysis for Banca Monte dei Paschi di Siena

How is Banca Monte dei Paschi di Siena going to perform in the near future?

Over the next three years, it seems the consensus view of the 5 analysts covering BMPS is skewed towards the positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for BMPS, 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.

BIT:BMPS Past and Future Earnings, April 26th 2019
BIT:BMPS Past and Future Earnings, April 26th 2019

This results in an annual growth rate of 11% based on the most recent earnings level of €344m to the final forecast of €480m by 2022. EPS reaches €0.42 in the final year of forecast compared to the current €0.31 EPS today. With a current profit margin of 13%, this movement will result in a margin of 14% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Banca Monte dei Paschi di Siena, there are three essential factors 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. Future Earnings: How does Banca Monte dei Paschi di Siena’s growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Banca Monte dei Paschi di Siena? 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.