Aviva plc Earnings Set To Soar By 117%!

Analysts are expecting Aviva plc’s (LON:AV) earnings per share to more than double in 2014.

| 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.

When it comes to forecasting company profits, the insurance sector can be tricky — though life insurance, at least, is not open to quite the same risks from natural disasters. But the whole sector has been through a tough patch, though there are some impressive forecasts out there now.

Just look at Aviva (LSE: AV) (NYSE: AV.US), which had a torrid time during the credit crunch and was forced to slash its dividend.

Back to growth

The firm is already back to earnings growth, and for the year to December 2014 the City’s analysts are forecasting a massive 117% rise in earnings per share (EPS) to 48p.

There’s a 10% hike in the dividend predicted too, from last year’s low of 15p per share to 16.6p. On today’s share price of 508p that would provide a yield of 3.3%, which is way down from the pre-cut levels — but it would still be respectable and, more importantly, well-covered and sustainable.

There’s a modest improvement on top of that penciled in for 2015, with EPS predicted to be up another 9% and with the dividend yield inching up to 3.7%.

Close consensus

The consensus of forecasts looks tight, too, with most individual estimates sticking pretty close to the median — for some companies, we often see a very wide range in individual prognostications, which does make me wonder where some of them get their figures from.

Actual recommendations are looking pretty bullish — out of 21 analysts and brokers, 11 have posted a Strong Buy (or equivalent) recommendation. Against that, however, the four bearish commentators are sticking with Strong Sell, while six are sitting on Hold.

AvivaConsistency, too

Looking back over the past 12 months, there has been very little variation in the consensus forecasts — the EPS forecast is up less than a penny, from 46.8p a year ago to 47.7p today, with the dividend forecast dropping a little, from 17.8p per share back then to 16.6p now.

The brokers seem to think that the worst is over for Aviva now, and the investing public does seem to be convinced by the current set of forecasts — they have pushed the share price up 65% over the past year!

Still a bargain?

But even after a gain like that, the shares still aren’t looking expensive to me — those forecasts would give us a forward P/E for this year of under 11, dropping to under 10 for 2015, and that’s way below the long-term FTSE average of around 14.

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.

Alan does not own any shares in Aviva.

More on Investing Articles

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

3 UK stocks I reckon could benefit from the upcoming general election

As the general election hurtles towards us, this Fool wonders which UK stocks could benefit, and focuses on three picks…

Read more »

BUY AND HOLD spelled in letters on top of a pile of books. Alongside is a piggy bank in glasses. Buy and hold is a popular long term stock and shares strategy.
Investing Articles

At 11%, this dividend share pays the biggest yield in the FTSE 100

When a dividend share offers a big yield, we need to be cautious of the risks. But I reckon this…

Read more »

British Isles on nautical map
Investing Articles

I reckon Hiscox shares could be one of the best bargains on the FTSE

I've been investing in FTSE companies for years, but after a major decline I've not seen a company with as…

Read more »

Grey Number 4 Stencil on Yellow Concrete Wall
Investing Articles

4 reasons I’d still buy National Grid shares in a heartbeat despite the recent wobble!

As National Grid shares plunged on the news of a right issue, I’m not flinching, and reckon it's a top…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

After gaining 45% in 12 months, is the Amazon share price now overvalued?

Our author thinks the Amazon share price might be too high. While the long-term future of the business looks bright,…

Read more »

Investing Articles

2 hot dividend stocks I’d buy and hold for 10 years

Our writer reckons these two dividend stocks could help her bag juicy dividends for years to come and explains why.

Read more »

British Pennies on a Pound Note
Investing Articles

2 dividend-paying penny shares I’d happily own

These two penny shares have caught our writer's eye for a combination of income prospects now and business growth potential…

Read more »

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

This FTSE 250 share looks like a bargain to me!

This FTSE 250 share has seen its price tumble due to chaotic local economic conditions in a key market. But…

Read more »