Analyzing American States Water Company’s (NYSE:AWR) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess AWR’s recent performance announced on 31 December 2019 and compare these figures to its long-term trend and industry movements.
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How Did AWR’s Recent Performance Stack Up Against Its Past?
AWR’s trailing twelve-month earnings (from 31 December 2019) of US$84m has jumped 32% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.1%, indicating the rate at which AWR is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is merely attributable to an industry uplift, or if American States Water has experienced some company-specific growth.
In terms of returns from investment, American States Water has fallen short of achieving a 20% return on equity (ROE), recording 14% instead. However, its return on assets (ROA) of 6.4% exceeds the US Water Utilities industry of 3.8%, indicating American States Water has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for American States Water’s debt level, has declined over the past 3 years from 8.9% to 8.4%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 64% to 81% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While American States Water has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. You should continue to research American States Water to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AWR’s future growth? Take a look at our free research report of analyst consensus for AWR’s outlook.
- Financial Health: Are AWR’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 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 editorial-team@simplywallst.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.
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