When weighing up a potential investment, we always need to look forward rather than backwards. If you buy a stake in a business, it’s the future profits that count — and the stock market will value your shares based on future expectations.
With that in mind, it can be helpful to review what expert City analysts are expecting a company to earn in the coming years. These expectations can be compared to the share price, to give you a better idea of how the stock market is valuing the business.
Today I’m looking at the earnings per share (EPS) forecasts for SABMiller (LSE: SAB) (NASDAQOTH: SBMRY.US), the FTSE 100 beverages giant.
Analysts expect SABMiller’s profits to be 171p per share in the coming 12months. Compared to today’s share price of 3,073p, these expectations value SABMiller’s shares on a forward price-to-earnings multiple of 18.
The consensus then calls for SABMiller’s earnings to reach 192p per share for 2015. Accordingly, analysts expect SABMiller to grow its dividend by an impressive 17% per year over the same time period, from 60p to over 81 pence per share.
It’s almost impossible to talk about SABMiller without mentioning fellow alcoholic drinks maker Diageo. Perennially in the shadow of its beverage rival, SABMiller’s brands are often overlooked by comparison. But only one of the two companies make it into “5 Shares You Can Retire On“, the Motley Fool’s free wealth report.
If you want to find out which company makes it into our exclusive research report and why we think it could be an ideal “share to retire on”, why not download it for free?
Just click here to download our free stock research report.
> Mark does not own any shares in this article.