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Measuring MGE Energy, Inc.'s (NASDAQ:MGEE) track record of past performance is a useful exercise for investors. It enables us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess MGEE's recent performance announced on 31 December 2018 and weigh these figures against its long-term trend and industry movements.
How Well Did MGEE Perform?
MGEE's trailing twelve-month earnings (from 31 December 2018) of US$84m has declined by -14% 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 5.1%, indicating the rate at which MGEE is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, MGE Energy has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. However, its return on assets (ROA) of 5.2% exceeds the US Electric Utilities industry of 4.3%, 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 7.6% to 6.7%.
What does this mean?
Though MGE Energy's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. You should continue to research MGE Energy to get a better picture 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 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 email@example.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.