Be Prepared For Lloyds Banking Group PLC’s Upcoming Results

A preview of Lloyds Banking Group PLC’s (LON:LLOY) upcoming half-year results.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US) is due to announce its half-year results on Thursday next week (1 August).

At the time of writing, Lloyds’ shares are trading at 68p – up 31% from six months ago compared with a 6% rise for the FTSE 100.

When I previewed the full-year results of Lloyds and Royal Bank of Scotland six months ago, I explained why, in their cases, analyst consensus forecasts were all but meaningless. The range of estimates was so wide that “guess” was probably a more suitable term than “estimate”.

Has the situation changed six months on? Let’s begin with a table of some of the key numbers.

  FY 2011 H1 2012 FY 2012 Forecast
H1 2013
Forecast
FY 2013
Forecast
FY growth
Underlying income,
net of insurance claims
£21.1bn £9.3bn £18.4bn ? £18.2bn -1%
Statutory earnings
per share (EPS)
-4.1p -1.0p -2.0p ?
Normalised EPS
(Financial Times)
5.02p 1.42p 5.68p ? 4.62p
(range: 2.0p – 6.9p)
-18.7%
Normalised EPS
(Morningstar)
-1.99p 1.02p ? 4.83p
(range: 2.0p – 5.1p)
+373%

Income

In the case of underlying income (net of insurance claims) there’s actually broad agreement: data providers the Financial Times, Morningstar and Digital Look all show a consensus forecast of around £18.2bn for 2013. As for the half-year, only the Financial Times provides a forecast: if the Pink ‘Un is right, £9.3bn is the H1 number to look out for next week.

Earnings

Unfortunately, the EPS picture remains as muddy as six months ago. Lloyds itself only gives us a statutory per-share number for earnings within its results. While this focus on the warts-and-all EPS is admirable, we don’t get management’s take on “underlying” or “normalised” EPS.

It’s possible to do some complicated calculations to come up with a normalised per-share number, but much is open to interpretation — as the historic EPS figures in the table above sourced from the Financial Times and Morningstar illustrate all too well!

The consensus EPS forecasts from the two data providers are a fair bit closer to each other at 4.62p and 4.83p — and a third data provider, Digital Look, isn’t too far off either at 4.44p. However, just look at the range of individual analyst estimates — sorry, guesses — that make up the consensuses in the table above.

In terms of valuation, at Lloyds’ recent share price of 68p, the prospective price-to-earnings ratio ranges from as high as 34 on EPS of 2p to as low as 10 on EPS of 6.9p.

So far as next week’s results announcement goes, we can only expect Lloyds to give us a statutory per-share earnings number as it has in the past. First-quarter statutory EPS came in at 2.2p — inflated by asset sales — and with further sales in Q2, the first-half number could easily be ahead of full-year consensus forecasts for normalised EPS.

Dividends

Analysts have different views on when Lloyds might resume paying dividends — and on the level of the initial payout. For 2013, the various consensus forecasts are 0.04p (Financial Times), 0.35p (Digital Look), and 0.83p (Morningstar). I don’t think anyone’s expecting a dividend to be declared for the half-year, though.

Meanwhile, if you’re in the market for companies that are already paying dividends — and handsome ones to boot — you may like to help yourself to the very latest free Motley Fool special report.

You see, this report tells you all about a great lower-risk income opportunity. The blue chip in question currently offers a 5.5% prospective yield, and the company’s management is expecting to grow that income at least in line with inflation in the years ahead.

Just click here to download the report — it’s free.

> G A Chester does not own any shares mentioned in this article.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Mature couple at the beach
Investing Articles

6 stocks that Fools have been buying!

Our Foolish freelancers are putting their money where their mouths are and buying these stocks in recent weeks.

Read more »

Black woman using loudspeaker to be heard
Investing Articles

I was right about the Barclays share price! Here’s what I think happens next

Jon Smith explains why he still feels the Barclays share price is undervalued and flags up why updates on its…

Read more »

Investing Articles

Where I’d start investing £8,000 in April 2024

Writer Ben McPoland highlights two areas of the stock market that he would target if he were to start investing…

Read more »

View of Tower Bridge in Autumn
Investing Articles

Ahead of the ISA deadline, here are 3 FTSE 100 stocks I’d consider

Jon Smith notes down some FTSE 100 stocks in sectors ranging from property to retail that he thinks could offer…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

Why I think Rolls-Royce shares will pay a dividend in 2024

Stephen Wright thinks Rolls-Royce shares are about to pay a dividend again. But he isn’t convinced this is something investors…

Read more »

Investing Articles

1 of the best UK shares to consider buying in April

Higher gold prices and a falling share price have put this FTSE 250 stock on Stephen Wright's list of UK…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

The market is wrong about this FTSE 250 stock. I’m buying it in April

Stephen Wright thinks investors should look past a 49% decline in earnings per share and consider investing in a FTSE…

Read more »

Black father and two young daughters dancing at home
Investing Articles

1 FTSE 250 stock I own, and 1 I’d love to buy

Our writer explains why she’s eyeing up this FTSE 250 growth phenomenon, and may buy more shares in this property…

Read more »