Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess Engie Energia Chile S.A.’s (SNSE:ECL) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Did ECL’s recent earnings growth beat the long-term trend and the industry?
ECL’s trailing twelve-month earnings (from 31 December 2019) of US$111m has increased by 8.0% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -3.0%, indicating the rate at which ECL is growing has accelerated. What’s enabled this growth? Let’s see if it is solely attributable to an industry uplift, or if Engie Energia Chile has experienced some company-specific growth.
In terms of returns from investment, Engie Energia Chile has fallen short of achieving a 20% return on equity (ROE), recording 5.6% instead. Furthermore, its return on assets (ROA) of 4.1% is below the CL Electric Utilities industry of 7.1%, indicating Engie Energia Chile’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Engie Energia Chile’s debt level, has increased over the past 3 years from 4.7% to 12%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 41% to 40% over the past 5 years.
What does this mean?
Engie Energia Chile’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. While Engie Energia Chile 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 Engie Energia Chile to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ECL’s future growth? Take a look at our free research report of analyst consensus for ECL’s outlook.
- Financial Health: Are ECL’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 firstname.lastname@example.org. 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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