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Has OPG Power Ventures Plc (LON:OPG) Improved Earnings Growth In Recent Times?

Simply Wall St

After reading OPG Power Ventures Plc's (AIM:OPG) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. 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.

Check out our latest analysis for OPG Power Ventures

How OPG fared against its long-term earnings performance and its industry

OPG's trailing twelve-month earnings (from 31 March 2019) of UK£15m has jumped 17% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.1%, indicating the rate at which OPG is growing has accelerated. How has it been able to do this? Let's see whether it is merely attributable to industry tailwinds, or if OPG Power Ventures has seen some company-specific growth.

AIM:OPG Income Statement, October 26th 2019

In terms of returns from investment, OPG Power Ventures has fallen short of achieving a 20% return on equity (ROE), recording 9.7% instead. However, its return on assets (ROA) of 6.7% exceeds the GB Electric Utilities industry of 4.5%, indicating OPG Power Ventures has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for OPG Power Ventures’s debt level, has increased over the past 3 years from 10% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 143% to 52% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. You should continue to research OPG Power Ventures to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for OPG’s future growth? Take a look at our free research report of analyst consensus for OPG’s outlook.
  2. Financial Health: Are OPG’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 March 2019. 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.