Assessing Public Joint Stock Company Territorial Generation Company No 14’s (MISX:TGKN) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess TGKN’s latest performance announced on 31 December 2017 and evaluate these figures to its historical trend and industry movements. Check out our latest analysis for Territorial Generation Company No. 14
Was TGKN’s weak performance lately a part of a long-term decline?TGKN’s trailing twelve-month earnings (from 31 December 2017) of RUруб392.83m has more than halved from RUруб1.75b in the prior year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 47.52%, indicating the rate at which TGKN is growing has slowed down. What could be happening here? Let’s examine what’s transpiring with margins and whether the entire industry is facing the same headwind.
In the past few years, revenue growth has not been able to catch up, which implies that Territorial Generation Company No. 14’s bottom line has been driven by unsustainable cost-reductions. Looking at growth from a sector-level, the RU electric utilities industry has been growing its average earnings by double-digit 41.09% in the past twelve months, and 12.62% over the past half a decade. This means that whatever uplift the industry is profiting from, Territorial Generation Company No. 14 has not been able to reap as much as its industry peers.In terms of returns from investment, Territorial Generation Company No. 14 has not invested its equity funds well, leading to a 7.02% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 6.09% exceeds the RU Electric Utilities industry of 5.73%, indicating Territorial Generation Company No. 14 has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Territorial Generation Company No. 14’s debt level, has increased over the past 3 years from 5.43% to 6.74%.
What does this mean?
Territorial Generation Company No. 14’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 volatile earnings, can have many factors affecting its business. You should continue to research Territorial Generation Company No. 14 to get a more holistic view of the stock by looking at:
- Financial Health: Is TGKN’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.