For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on Spire Inc (NYSE:SR) useful as an attempt to give more color around how Spire is currently performing.
Did SR’s recent earnings growth beat the long-term trend and the industry?
SR’s trailing twelve-month earnings (from 30 September 2018) of US$214m has jumped 33% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 22%, indicating the rate at which SR is growing has accelerated. What’s enabled this growth? Let’s take a look at if it is merely owing to an industry uplift, or if Spire has experienced some company-specific growth.
In terms of returns from investment, Spire has fallen short of achieving a 20% return on equity (ROE), recording 9.5% instead. Furthermore, its return on assets (ROA) of 4.6% is below the US Gas Utilities industry of 4.9%, indicating Spire’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Spire’s debt level, has declined over the past 3 years from 6.1% to 5.1%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 94% to 116% over the past 5 years.
What does this mean?
Though Spire’s past data is helpful, it is only one aspect of my investment thesis. While Spire has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Spire to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for SR’s future growth? Take a look at our free research report of analyst consensus for SR’s outlook.
- Financial Health: Are SR’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 September 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.