What Do Investors Need To Know About Big Yellow Group Plc’s (LON:BYG) Growth?

Looking at Big Yellow Group Plc’s (LON:BYG) earnings update in September 2018, Currently with a trailing-twelve-month profit of UK£134m, the consensus growth rate suggests that earnings will drop to UK£138m by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for Big Yellow Group in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

See our latest analysis for Big Yellow Group

How is Big Yellow Group going to perform in the near future?

The longer term expectations from the 9 analysts of BYG is tilted towards the negative sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To understand the overall trajectory of BYG’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

LSE:BYG Past and Future Earnings, April 17th 2019
LSE:BYG Past and Future Earnings, April 17th 2019

This results in an annual growth rate of -3.0% based on the most recent earnings level of UK£134m to the final forecast of UK£117m by 2022. This leads to an EPS of £0.66 in the final year of projections relative to the current EPS of £0.85. Earnings decline appears to be a result of top-line expansion of 5.9%, which is predicted to lag cost growth leading up to 2022. With this high cost growth, margins is expected to contract from 114% to 80% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Big Yellow Group, 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. Valuation: What is Big Yellow Group 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 Big Yellow Group is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Big Yellow Group? 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.