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Does Public Service Enterprise Group Incorporated’s (NYSE:PEG) -8.6% Earnings Drop Reflect A Longer Term Trend?

Simply Wall St

Assessing Public Service Enterprise Group Incorporated’s (NYSE:PEG) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess PEG’s recent performance announced on 31 December 2018 and evaluate these figures to its longer term trend and industry movements.

Check out our latest analysis for Public Service Enterprise Group

Commentary On PEG’s Past Performance

PEG’s trailing twelve-month earnings (from 31 December 2018) of US$1.4b has declined by -8.6% 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 2.3%, indicating the rate at which PEG is growing has slowed down. Why could this be happening? Let’s examine what’s occurring with margins and if the entire industry is feeling the heat.

NYSE:PEG Income Statement, March 6th 2019

In terms of returns from investment, Public Service Enterprise Group has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 4.1% is below the US Integrated Utilities industry of 4.5%, indicating Public Service Enterprise Group’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Public Service Enterprise Group’s debt level, has declined over the past 3 years from 8.3% to 5.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 75% to 108% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have capricious earnings, can have many factors impacting its business. I suggest you continue to research Public Service Enterprise Group to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for PEG’s future growth? Take a look at our free research report of analyst consensus for PEG’s outlook.
  2. Financial Health: Are PEG’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 31 December 2018. 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.