Today I will take a look at MGE Energy Inc’s (NASDAQ:MGEE) most recent earnings update (30 June 2018) and compare these latest figures against its performance over the past few years, as well as how the rest of the electric utilities industry performed. As an investor, I find it beneficial to assess MGEE’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
How MGEE fared against its long-term earnings performance and its industry
MGEE’s trailing twelve-month earnings (from 30 June 2018) of US$101m has jumped 31% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.4%, indicating the rate at which MGEE is growing has accelerated. What’s enabled this growth? Well, let’s take a look at if it is only due to industry tailwinds, or if MGE Energy has seen some company-specific growth.
In terms of returns from investment, MGE Energy has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 6.3% exceeds the US Electric Utilities industry of 4.1%, indicating MGE Energy has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for MGE Energy’s debt level, has declined over the past 3 years from 6.9% to 6.4%.
What does this mean?
Though MGE Energy’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as MGE Energy gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research MGE Energy to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MGEE’s future growth? Take a look at our free research report of analyst consensus for MGEE’s outlook.
- Financial Health: Are MGEE’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 June 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 firstname.lastname@example.org.