When Public Joint-Stock Company Federal Hydro-Generating Company – RusHydro (MCX:HYDR) released its most recent earnings update (30 June 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Federal Hydro-Generating Company – RusHydro has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I’ve summarized the key takeaways on how I see HYDR has performed.
Commentary On HYDR’s Past Performance
HYDR’s trailing twelve-month earnings (from 30 June 2018) of RUруб37.6b has increased by 5.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 23%, indicating the rate at which HYDR is growing has slowed down. To understand what’s happening, let’s examine what’s transpiring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Federal Hydro-Generating Company – RusHydro has fallen short of achieving a 20% return on equity (ROE), recording 5.1% instead. Furthermore, its return on assets (ROA) of 3.4% is below the RU Electric Utilities industry of 5.5%, indicating Federal Hydro-Generating Company – RusHydro’s are utilized less efficiently. However, its return on capital (ROC), which also accounts for Federal Hydro-Generating Company – RusHydro’s debt level, has increased over the past 3 years from 5.0% to 7.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 32% to 23% over the past 5 years.
What does this mean?
Though Federal Hydro-Generating Company – RusHydro’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Federal Hydro-Generating Company – RusHydro gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Federal Hydro-Generating Company – RusHydro to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HYDR’s future growth? Take a look at our free research report of analyst consensus for HYDR’s outlook.
- Financial Health: Are HYDR’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 email@example.com.