LONDON -- It's always worth keeping an eye on the earnings forecasts for your favorite companies, especially if you use forward price-to-earnings ratio 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 Lloyds Banking Group (LLOY 0.39%) (LYG 0.20%), the FTSE 100 high-street bank. All my figures are courtesy of S&P Capital IQ.
The consensus for 2012 is for earnings per share of 2 pence, which puts the 47 pence shares on a lofty forward P/E of 23.
The estimates also suggest earnings may rise to 4 pence per share for 2013 and then climb to 6 pence per share in 2014 before flattening off at that level the year after.
The data from S&P Capital IQ also indicates Lloyds Banking Group's revenues may struggle to reach the levels attained in 2011. They are expected to fall to 18.5 billion pounds and remain largely unchanged for three years. Revenues could then climb to 19.1 billion pounds in 2015.
All told, the forecasts aren't great, with earnings essentially predicted to go nowhere after 2014. But then again, that P/E of 23 looks like the market is hoping the forecasts may be too pessimistic.
Whether these projections make Lloyds Banking Group 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 5,967 trades on a P/E of around 11.
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