Why Growth Is Set To Explode At British American Tobacco plc, Travis Perkins plc, International Consolidated Airlns SA Grp And Dixons Carphone PLC

Today I am taking a look at the earnings outlook of four British blue-chip wonders.

British American Tobacco

The rising regulatory heat surrounding the sale and usage of cigarettes, combined with the impact of adverse currency movements, continues to cash a shadow over British American Tobacco’s (LSE: BATS) bottom line. Fortunately the terrific pricing power of key brands like Dunhill and Lucky Strike have enabled it to offset the worst of falling volumes, however, and I believe that rising spending power in critical developing regions — combined with vast investment in the white-hot ‘vapour’ sector — should allow the business to ride-out current problems and deliver excellent long-term revenues growth.

With the business also undertaking a massive cost-stripping exercise, the City expects British American Tobacco to punch a marginal earnings bounce in 2015 before an 8% uptick transpires the following year. Consequently the tobacco giant’s P/E ratio of 18.2 times for this year falls to a very reasonable 16.9 times for 2016.

Travis Perkins

Thanks to the steady uptrend seen across the construction industry, I believe building merchants Travis Perkins (LSE: TPK) is set to deliver excellent earnings growth in the years ahead. The business saw revenues improve 7.8% during January-June, to £2.9bn, it announced last week, and with the company planning to add another 400 stores to its 2,000-strong network over the next four years I can only foresee the top-line heading skywards.

This view is shared by the number crunchers, and Travis Perkins is expected to follow a 10% earnings increase in 2015 with an 18% improvement in the following year. These projections leave the hardware supplier dealing on P/E ratios of 16.3 times for the current period and 14.3 times for 2015 — any number around or below 15 times is widely considered stellar value.

International Consolidated Airlines Group

With rising income levels helping to fund the wanderlust of populations across the globe, I reckon carriers like International Consolidated Airlines (LSE: IAG) should enjoy brilliant earnings growth. The group saw total passenger numbers leap 9.4% in July, it noted last week, continuing the steady uptrend of recent times as transatlantic plane activity remains strong and sales of cheap seats on its Vueling planes ticks along.

And supported by low fuel costs, the City expects IAG to rack up earnings growth of 75% in 2015, resulting in a P/E rating of just 10.1 times. And this figure moves to a bargain-basement 8.4 times for next year due to expectations of a 20% bottom-line bulge.

Dixons Carphone

Supported by strong retail conditions in the UK, I fully expect gadget and white goods sales over at Dixons Carphone (LSE: DC) to keep on fizzing. The British Retail Consortium (BRC) announced last week that total retail sales leapt 2.2% in July thanks to improving wage levels and employment rates, and Dixons Carphone’s latest numbers last month underlined consumers’ strong appetite for tech goods — group underlying sales rose 6% in the year concluding April 2015, to £9.9bn.

Given these robust market conditions the abacus bashers expect Dixons Carphone to enjoy a 4% earnings rise in fiscal 2016, creating an attractive P/E ratio of 15.9 times. And improving sales momentum is predicted to drive the bottom line 12% higher in the following year, driving the earnings multiple to an even-better 14.2 times.

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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.