For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on WEC Energy Group, Inc. (NYSE:WEC) useful as an attempt to give more color around how WEC Energy Group is currently performing.
Was WEC’s recent earnings decline indicative of a tough track record?
WEC’s trailing twelve-month earnings (from 30 June 2019) of US$1.1b 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 17%, indicating the rate at which WEC is growing has slowed down. Why is this? Well, let’s look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, WEC Energy Group has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 4.6% exceeds the US Integrated Utilities industry of 4.5%, indicating WEC Energy Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for WEC Energy Group’s debt level, has declined over the past 3 years from 5.8% to 4.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 115% to 117% over the past 5 years.
What does this mean?
WEC Energy Group’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 capricious earnings, can have many factors influencing its business. I recommend you continue to research WEC Energy Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WEC’s future growth? Take a look at our free research report of analyst consensus for WEC’s outlook.
- Financial Health: Are WEC’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.
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