LONDON -- It's always worth keeping an eye on the earnings forecasts for your favorite 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 forecasts for BHP Billiton
The consensus for 2013 is for EPS of 170 pence, which puts the 1,926 pence shares on a forward P/E of 11. The estimates suggest earnings may rise to 196 pence per share for 2014 and climb to 202 pence for 2015. EPS may then rise further to 206 pence for 2016 before falling back to 198 pence in 2017, at least according to City analysts.
The data from S&P Capital IQ also indicates BHP Billiton's revenue may rise from 43 billion pounds in 2013 to 48 billion pounds the following year before climbing to 52 billion pounds the year after. However, apart from rising revenue, the forecasts for BHP aren't great: Profits are essentially predicted to go nowhere between 2014 and 2016. But then again, that P/E of around 11 suggests the market is already expecting that earnings won't advance anytime soon.
Whether these projections make BHP Billiton a buy, a hold, or a sell is, of course, up to you. To put the company's multiple into perspective, the FTSE 100 at 5,755 trades on a P/E of 11.4.
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David does not own shares in BHP Billiton. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.