How might earnings at AstraZeneca (LSE: AZN) change in the years to come?
It's always worth keeping an eye on the earnings forecasts for your favourite companies, especially if you use forward P/E ratios to gauge when to buy and sell your shares.
You never know, if City brokers have been revising their projections of late, your investments may not be as cheap -- or expensive -- as you think!
Today I'm looking at the earnings per share (EPS) forecasts for AstraZeneca (LSE: AZN) (NYSE: AZN.US), the FTSE 100 (UKX) pharmaceutical group. All my figures are courtesy of S&P Capital IQ.
The consensus for 2012 is for earnings per share of 371p, which puts the £29 shares on a lowly forward P/E of 7.8.
However, the estimates suggest earnings may drop to 358p per share for 2013 and rebound only slightly to 366p for 2014.
Earnings may then advance to 374p per share for 2015, only then to slide back to 362p per share for 2016, at least according to City analysts.
The data from S&P Capital IQ also indicates AstraZeneca's revenues may stall around the £16 billion mark and EBITDA stagnate at about £6 billion mark during the next few years.
All told, the forecasts aren't great, with earnings essentially predicted to go nowhere between 2012 and 2016. But then again, that P/E of 7.8 looks like the market is already expecting earnings won't advance anytime soon.
Whether these projections make AstraZeneca a buy, a hold or a sell is of course up to you. To put the company's multiple into perspective, the FTSE 100 at 5,842 trades on a P/E of 11.4.
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> Maynard does not own any share mentioned in this article.