The most recent earnings announcement Bank of Queensland Limited’s (ASX:BOQ) released in August 2018 confirmed that the company endured a minor headwind with earnings deteriorating from AU$352m to AU$336m, a change of -4.5%. Today I want to provide a brief commentary on how market analysts predict Bank of Queensland’s earnings growth trajectory over the next few years and whether the future looks brighter. 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 Bank of Queensland

Analysts’ outlook for this coming year seems rather subdued, with earnings expanding by a single digit 9.4%. The growth outlook in the following year seems much more optimistic with rates arriving at double digit 11% compared to today’s earnings, and finally hitting AU$378m by 2022.

Although it’s helpful to understand the growth rate year by year relative to today’s value, it may be more insightful to determine the rate at which the business is moving on average every year. The benefit of this approach is that we can get a bigger picture of the direction of Bank of Queensland’s earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 4.0%. This means that, we can presume Bank of Queensland will grow its earnings by 4.0% every year for the next couple of years.

Next Steps:

For Bank of Queensland, there are three important factors you should further examine:

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 BOQ 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 BOQ is currently mispriced by the market.

3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of BOQ? 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.