For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at Ameren Corporation’s (NYSE:AEE) 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.
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Commentary On AEE’s Past Performance
AEE’s trailing twelve-month earnings (from 31 March 2019) of US$855m has jumped 49% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 5.2%, indicating the rate at which AEE is growing has accelerated. How has it been able to do this? Let’s see if it is only owing to industry tailwinds, or if Ameren has experienced some company-specific growth.
In terms of returns from investment, Ameren has fallen short of achieving a 20% return on equity (ROE), recording 11% instead. Furthermore, its return on assets (ROA) of 4.4% is below the US Integrated Utilities industry of 4.5%, indicating Ameren’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Ameren’s debt level, has declined over the past 3 years from 6.0% to 5.8%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 99% to 120% over the past 5 years.
What does this mean?
Though Ameren’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Ameren gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Ameren to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AEE’s future growth? Take a look at our free research report of analyst consensus for AEE’s outlook.
- Financial Health: Are AEE’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.
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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.