After looking at Ameresco, Inc.'s (NYSE:AMRC) latest earnings announcement (31 December 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.
Did AMRC beat its long-term earnings growth trend and its industry?
AMRC's trailing twelve-month earnings (from 31 December 2019) of US$44m has jumped 17% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 36%, indicating the rate at which AMRC is growing has slowed down. To understand what's happening, let's look at what's transpiring with margins and whether the whole industry is feeling the heat.
In terms of returns from investment, Ameresco has fallen short of achieving a 20% return on equity (ROE), recording 8.8% instead. Furthermore, its return on assets (ROA) of 4.4% is below the US Construction industry of 6.2%, indicating Ameresco's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Ameresco’s debt level, has increased over the past 3 years from 4.7% to 4.8%.
What does this mean?
Though Ameresco's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Ameresco gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Ameresco to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AMRC’s future growth? Take a look at our free research report of analyst consensus for AMRC’s outlook.
- Financial Health: Are AMRC’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 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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