Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

How BG Group plc (BG) Measures up as a GARP Investment

Page 1 of 2

LONDON — A popular way to dig out reasonably priced stocks with robust growth potential is through the “Growth at a Reasonable Price”, or GARP, strategy. This theory uses the price-to-earnings to growth (PEG) ratio to show how a share’s price weighs up in relation to its near-term growth prospects — a reading below 1 is generally considered decent value for money.

Today I am looking at BG Group plc (LON:BG) to see how it measures up.

BG Group plc

What are BG Group’s earnings expected to do?

2013 2014
EPS Growth (4.0)% 19.0%
P/E Ratio 14.7 12.4
PEG Ratio n/a 0.7

Source: Digital Look

City analysts expect BG Group plc (LON:BG) to post a modest earnings dip in 2013 following three years of consecutive growth. But earnings expansion is expected to resume with gusto next year.

The oil operator’s expected earnings slip this year results in an invalid PEG rating, although this ratio is anticipated to ride into bargain territory in 2014. The firm’s price-to-earnings (P/E) ratio meanwhile is expected to remain above 10 for this year and next — a reading below this is generally considered decent value for money.

Does BG Group provide decent value against its rivals?

FTSE 100 Oil and Gas Producers
Prospective P/E Ratio 15.2 22.6
Prospective PEG Ratio 4.5 1.2

Source: Digital Look

BG Group plc (LON:BG) currently outperforms both the FTSE 100 as well as its oil and gas counterparts on a P/E basis. Still, the firm’s projected earnings drop this year leaves it lagging behind both groups in terms of prospective PEG ratio.

Despite earnings difficulties during the current year, a situation that undermines its position as a potential GARP selection, I reckon that investors should realize sound rewards in coming years as operations at its lucrative assets are ratcheted up several notches.

Oil production expected to surge from 2014
The company has a spate of new oil fields due to come online shortly, from the U.K. to Norway, Thailand to Trinidad. In particular, BG Group plc (LON:BG)’s gigantic Queensland Curtis LNG facility is due to commence pumping as of the beginning of 2014, while production at its offshore assets in Brazil is also picking up the pace.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!