After reading WEC Energy Group Inc’s (NYSE:WEC) latest earnings update (30 September 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether WEC has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Were WEC’s earnings stronger than its past performances and the industry?
WEC’s trailing twelve-month earnings (from 30 September 2018) of US$1.3b has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 19%, indicating the rate at which WEC is growing has accelerated. How has it been able to do this? Let’s take a look at if it is solely a result of an industry uplift, or if WEC Energy Group has seen some company-specific growth.
In terms of returns from investment, WEC Energy Group has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 5.3% exceeds the US Integrated Utilities industry of 4.9%, indicating WEC Energy Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for WEC Energy Group’s debt level, has increased over the past 3 years from 3.8% to 4.7%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 121% to 115% 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. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest you continue to research WEC Energy Group to get a more holistic view of the stock by looking at:
- 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.
- 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.
- 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 firstname.lastname@example.org.