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When The York Water Company (NASDAQ:YORW) announced its most recent earnings (31 March 2019), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how York Water performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see YORW has performed.
Did YORW’s recent earnings growth beat the long-term trend and the industry?
YORW’s trailing twelve-month earnings (from 31 March 2019) of US$14m has increased by 4.7% 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 4.8%, indicating the rate at which YORW is growing has slowed down. To understand what’s happening, let’s look at what’s going on with margins and if the rest of the industry is facing the same headwind.
In terms of returns from investment, York Water has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. However, its return on assets (ROA) of 5.5% exceeds the US Water Utilities industry of 3.9%, indicating York Water has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for York Water’s debt level, has declined over the past 3 years from 7.5% to 6.3%.
What does this mean?
York Water’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as York Water gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research York Water to get a more holistic view of the stock by looking at:
- Financial Health: Are YORW’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 March 2019. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.