It’s always worth keeping an eye on the earnings forecasts for your favourite companies, especially if you use forward P/E ratios to gauge when to buy and sell your shares.
You never know, if City brokers have been revising their projections of late, your investments may not be as cheap — or expensive — as you think!
Today I’m looking at the earnings per share (EPS) forecasts for Royal Bank of Scotland (LSE: RBS) (NYSE: RBS.US), the FTSE 100 bank. All my figures are courtesy of S&P Capital IQ.
The consensus for 2013 is for underlying EPS of 18p, which puts the 335p shares on a punchy forward P/E of 19.
However, the estimates suggest earnings may rally to 30p per share for 2014 and advance further to 36p for 2015, at least according to City analysts.
The latter projection places the shares on a P/E of 10.
The data from S&P Capital IQ also indicates total income at RBS may stall around the £20bn mark and EBITDA stagnate at about £10bn during the next few years.
All told, the forecasts seem optimistic, with pre-exceptional earnings essentially predicted to double between 2013 and 2015. But then again, that near-term P/E of 19 looks like the market is already expecting earnings will advance quickly quite soon.
Whether these projections make RBS a buy, a hold or a sell is of course something only you can decide. To put the company’s multiple into perspective, the FTSE 100 at 6,441 trades on a P/E of 14.7.
If you already own RBS and are looking for great value blue chips, this exclusive wealth report reviews five FTSE names you may wish to consider.
In fact, all five selections offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as “5 Shares You Can Retire On“.
Just click here for this special report now — it’s free.
> Maynard does not own any share mentioned in this article.
According to one leading industry firm, the 5G boom could create a global industry worth US $12.3 TRILLION out of thin air…
And if you click here, we’ll show you something that could be key to unlocking 5G’s full potential...
It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…
But you need to get in before the crowd catches onto this ‘sleeping giant’.