Shares in Lloyds (LSE: LLOY) (NYSE: LYG.US) have had a great year, posting capital gains of 64% while the FTSE 100 is up just 3% over the same period. Indeed, many investors have looked ahead to the future potential that Lloyds offers, with the bank set to move from loss-making to profit-making this year.
However, do the share price gains mean that Lloyds is no longer an attractive growth play? Or could it yet prove to be a super growth stock?
Turning The Corner
The last four years have seen Lloyds make a loss (on a per-share basis) in every year. However, that (according to forecasts) is all about to change, since 2014 is expected to bring earnings per share of 7.35p. This is great news for shareholders and shows that the company is beginning to turn itself around. With the macroeconomic outlook improving, the prospects for Lloyds appear to be encouraging.
Indeed, Lloyds is forecast to not only make a profit this year, but to grow that profit at an above-average rate next year. For example, while the FTSE 100 is set to deliver earnings growth of between 4% and 7% in 2014 and 2015, Lloyds is forecast to grow earnings per share (EPS) by 8.5%. Clearly, Lloyds is staring from a relatively low base (having made a loss in each of the last four years) but growth forecasts remain positive and highly encouraging for shareholders.
Looking Ahead
Although shares in Lloyds have risen by 65% over the last year, they still seem to offer good value. While the FTSE 100 currently trades on a price to earnings (P/E) ratio of around 13.5, Lloyds has a P/E of 10.6. This highlights the strong relative value that Lloyds offers and, moreover, when combined with the EPS growth forecast figure, deliver a price to earnings growth (PEG) ratio of 1.25. This is very attractive and shows that Lloyds appears to offer good value as well as strong growth prospects.
Despite having had a disappointing five years in terms of profitability, Lloyds looks to be turning the corner. It appears to offer good value and strong growth prospects, making it a super growth stock despite already having risen by 65% over the last year alone.