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With A -14% Earnings Drop, Did WEC Energy Group, Inc. (NYSE:WEC) Really Underperform?

Measuring WEC Energy Group, Inc.'s (NYSE:WEC) track record of past performance is an insightful exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess WEC's recent performance announced on 30 June 2019 and compare these figures to its historical trend and industry movements.

Check out our latest analysis for WEC Energy Group

Was WEC weak performance lately part of a long-term decline?

WEC's trailing twelve-month earnings (from 30 June 2019) of US$1.1b has declined by -14% compared to the previous year.

Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which WEC is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and if the whole industry is experiencing the hit as well.

NYSE:WEC Income Statement, September 11th 2019
NYSE:WEC Income Statement, September 11th 2019

In terms of returns from investment, WEC Energy Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 4.6% exceeds the US Integrated Utilities industry of 4.5%, indicating WEC Energy Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for WEC Energy Group’s debt level, has declined over the past 3 years from 5.8% to 4.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 115% to 117% over the past 5 years.

What does this mean?

Though WEC Energy Group's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research WEC Energy Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for WEC’s future growth? Take a look at our free research report of analyst consensus for WEC’s outlook.

  2. Financial Health: Are WEC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.

  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.

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