Examining OGE Energy Corp’s (NYSE:OGE) past track record of performance is a valuable exercise for investors. It enables us to understand whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess OGE’s latest performance announced on 30 June 2018 and weigh these figures against its longer term trend and industry movements.
How Well Did OGE Perform?
OGE’s trailing twelve-month earnings (from 30 June 2018) of US$643.9m has jumped 68.4% compared to the previous year. Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.2%, indicating the rate at which OGE 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 OGE Energy has seen some company-specific growth.
Over the past couple of years, OGE Energy expanded bottom-line, while its top-line declined, by efficiently managing its costs. This brought about to a margin expansion and profitability over time. Inspecting growth from a sector-level, the US electric utilities industry has been growing, albeit, at a muted single-digit rate of 2.6% over the prior year, and 5.3% over the past five years. This growth is a median of profitable companies of 25 Electric Utilities companies in US including PG&E, Edison International and Chugoku Electric Power Company. This shows that any recent headwind the industry is facing, OGE Energy is relatively better-cushioned than its peers.
In terms of returns from investment, OGE Energy has fallen short of achieving a 20% return on equity (ROE), recording 16.6% instead. However, its return on assets (ROA) of 7.7% exceeds the US Electric Utilities industry of 4.0%, indicating OGE Energy has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for OGE Energy’s debt level, has increased over the past 3 years from 5.9% to 6.0%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 102% to 82.3% over the past 5 years.
What does this mean?
OGE Energy’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as OGE Energy gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research OGE Energy to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for OGE’s future growth? Take a look at our free research report of analyst consensus for OGE’s outlook.
- Financial Health: Are OGE’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 June 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.