What Are The City's Expectations For BG Group Plc?

Published in Company Comment on 3 July 2013

How might dividends and earnings at BG Group plc (LON: BG) change in the years to come?

When weighing up a potential investment, we always need to look forward rather than backwards. If you buy a stake in a business, it's the future profits that count -- and the stock market will value your shares based on future expectations.

With that in mind, it can be helpful to review what expert City analysts are expecting a company to earn in the coming years. These expectations can be compared to the share price, to give you a better idea of how the stock market is valuing the business.

Today I'm looking at the earnings per share (EPS) forecasts for BG Group (LSE: BG) (NASDAQOTH: BRGYY.US), the FTSE 100 natural gas giant.

Analysts expect BG's profits to be 82p per share in the coming year. This estimate means that, compared to today's share price of 1,097p, the market is valuing BG Group's shares on a forward price-to-earnings multiple of 13.3.

Looking ahead, consensus expectations then call for BG's earnings to jump to 96p per share for 2014. Reflecting the company's improved cash flows, analysts expect BG Group's 18.3p dividend in the coming year to be hiked to 19.8 pence per share the year after, 12% annualised dividend growth.

Even with that rate of dividend growth though, yielding less than 1.8% based on today's share price, BG is unlikely to attract many income-minded investors.

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The Fool's choice recently revealed its dividend would increase "at least in line with the rate of UK inflation", and provides a market-beating 5.6% yield.

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> Mark does not own any shares in this article.

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