Today I will take a look at Spire Inc.'s (NYSE:SR) most recent earnings update (30 September 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the gas utilities industry performed. As an investor, I find it beneficial to assess SR’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.
Was SR weak performance lately part of a long-term decline?
SR's trailing twelve-month earnings (from 30 September 2019) of US$179m has declined by -16% 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 13%, indicating the rate at which SR is growing has slowed down. Why could this be happening? Well, let's look at what's transpiring with margins and whether the whole industry is facing the same headwind.
In terms of returns from investment, Spire has fallen short of achieving a 20% return on equity (ROE), recording 7.3% instead. Furthermore, its return on assets (ROA) of 3.7% is below the US Gas Utilities industry of 4.3%, indicating Spire's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Spire’s debt level, has declined over the past 3 years from 5.8% to 5.0%.
What does this mean?
Spire's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I suggest you continue to research Spire to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SR’s future growth? Take a look at our free research report of analyst consensus for SR’s outlook.
- Financial Health: Are SR’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 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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