Today I am looking at three companies primed to enjoy stunning earnings expansion in 2015.
Extensive restructuring at Banking institution Barclays (LSE: BARC) (NYSE: BCS.US) has significantly boosted the firm’s earnings outlook in recent times. A plan to pull out of riskier sectors and double down on its retail operations is paying off handsomely, particularly in the highly-competitive mortgages sector. And a programme of extensive cost-slashing and rising digitalisation is also boosting its earnings potential.
Indeed, City brokers expect Barclays to put to bed years of earnings volatility this year, and a 23% earnings advance — to 20.6p per share — is currently chalked in. But the bank is predicted to better this performance next year, and a 26% jump to 26.1p is currently estimated.
Barclays can already be considered a bona-fide bargain in my opinion, the bank changing hands on a P/E readout of 11.5 times predicted earnings for 2014. But next year’s additional charge drives this to just 9.1 times — any figure below 10 is generally considered too good to pass up.
International Consolidated Airlines Group
Resurgent travel giant International Consolidated Airlines (LSE: IAG) continues to benefit from surging traveller numbers, as well as the fruits of painful restructuring at its Iberia operations in Spain. While the British Airways operator is enjoying roaring transatlantic trade, its Vueling low-cost brand also benefitting from rising demand amongst budget passengers in Europe.
As a result the company is expected to follow an anticipated 88% earnings improvement this year, to 39.9 euro cents per share, with a further 44% advance in 2015 to 58.9 cents.
Consequently International Consolidated Airlines can be considered a steal, in my opinion, with an attractive P/E multiple of 13.8 times earnings for 2014 plummeting to just 9.3 times for next year. And the firm’s terrific value is underlined by a price to earnings to growth (PEG) readout of just 0.2 — a number below 1 is widely regarded as tremendous bang for one’s buck.
Electricals giant Dixons Carphone (LSE: DC), forged through the alliance of Dixons Retail and Carphone Warehouse in the summer, is poised to benefit from its considerable exposure across the UK and Europe. While steady goods demand is anticipated to underpin solid revenues growth in the medium term, the firm — whose brands include Currys and PC World — has identified bolt-on purchases such as installation and warranties as the key to red-hot earnings growth.
City analysts expect the business to punch growth of 23% in the 12 months to April 2015, to 21.4p per share and creating a P/E reading of 20 times earnings. Although this may not appear appetising at first glance, further growth of 21% in fiscal 2016 drives this to a much more appetising just 16.5 times.
And while these figures may not blow your socks off, PEG figures of 0.9 and 0.8 for 2015 and 2016 respectively illustrate the company’s terrific value relative to its growth prospects.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.