Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5973
    -0.0032 (-0.54%)
     
  • NZD/EUR

    0.5536
    -0.0007 (-0.12%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    82.99
    +1.64 (+2.02%)
     
  • GOLD

    2,242.10
    +29.40 (+1.33%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • NZD/JPY

    90.3740
    -0.4060 (-0.45%)
     

Westpac Banking Corporation (ASX:WBC): Are Analysts Bullish?

In September 2018, Westpac Banking Corporation (ASX:WBC) released its most recent earnings announcement, which indicated that the business benefited from a slight tailwind, leading to a single-digit earnings growth of 1.3%. Investors may find it useful to understand how market analysts predict Westpac Banking’s earnings growth trajectory over the next couple of years and whether the future looks even brighter than the past. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for Westpac Banking

Market analysts’ consensus outlook for the upcoming year seems rather muted, with earnings rising by a single digit 4.7%. The following year doesn’t look much more exciting, though earnings does reach AU$9.2b in 2021.

ASX:WBC Future Profit November 8th 18
ASX:WBC Future Profit November 8th 18

Although it’s informative understanding the rate of growth year by year relative to today’s figure, it may be more valuable to analyze the rate at which the company is moving on average every year. The pro of this method is that we can get a bigger picture of the direction of Westpac Banking’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To compute this rate, I’ve appended a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 4.3%. This means, we can presume Westpac Banking will grow its earnings by 4.3% every year for the next couple of years.

Next Steps:

For Westpac Banking, I’ve compiled three relevant factors you should further examine:

ADVERTISEMENT
  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.

  2. Valuation: What is WBC worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether WBC is currently mispriced by the market.

  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of WBC? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.