For investors, increase in profitability and industry-beating performance can be essential considerations in an investment. Below, I will examine Enel SpA’s (BIT:ENEL) track record on a high level, to give you some insight into how the company has been performing against its long term trend and its industry peers.
Were ENEL’s earnings stronger than its past performances and the industry?
ENEL’s trailing twelve-month earnings (from 30 June 2019) of €5.0b has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 26%, indicating the rate at which ENEL is growing has accelerated. What’s enabled this growth? Let’s see if it is merely because of industry tailwinds, or if Enel has seen some company-specific growth.
In terms of returns from investment, Enel has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 4.2% is below the IT Electric Utilities industry of 4.5%, indicating Enel’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Enel’s debt level, has declined over the past 3 years from 9.3% to 7.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 112% to 124% over the past 5 years.
What does this mean?
Enel’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Enel has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I recommend you continue to research Enel to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ENEL’s future growth? Take a look at our free research report of analyst consensus for ENEL’s outlook.
- Financial Health: Are ENEL’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 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 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.