Did RGC Resources, Inc.’s (NASDAQ:RGCO) Recent Earnings Growth Beat The Trend?
In this article, I will take a look at RGC Resources, Inc.’s (NASDAQ:RGCO) most recent earnings update (30 September 2018) and compare these latest figures against its performance over the past few years, along with how the rest of RGCO’s industry performed. As a long-term investor, I find it useful to analyze the company’s trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.
View our latest analysis for RGC Resources
How Well Did RGCO Perform?
RGCO’s trailing twelve-month earnings (from 30 September 2018) of US$7.3m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.5%, indicating the rate at which RGCO is growing has accelerated. What’s the driver of this growth? Let’s see whether it is only owing to an industry uplift, or if RGC Resources has experienced some company-specific growth.
In terms of returns from investment, RGC Resources has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. Furthermore, its return on assets (ROA) of 4.4% is below the US Gas Utilities industry of 4.9%, indicating RGC Resources’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for RGC Resources’s debt level, has declined over the past 3 years from 8.2% to 5.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 61% to 88% over the past 5 years.
What does this mean?
Though RGC Resources’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as RGC Resources gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research RGC Resources to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for RGCO’s future growth? Take a look at our free research report of analyst consensus for RGCO’s outlook.
Financial Health: Are RGCO’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.
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 September 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
