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