Yahoo Finance Does Ameren Corporation's (NYSE:AEE) -8.4% Earnings Drop Reflect A Longer Term Trend?
When Ameren Corporation (NYSE:AEE) announced its most recent earnings (31 March 2020), 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 Ameren 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 AEE has performed.
Check out our latest analysis for Ameren
Was AEE's recent earnings decline indicative of a tough track record?
AEE's trailing twelve-month earnings (from 31 March 2020) of US$783m has declined by -8.4% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.7%, indicating the rate at which AEE is growing has slowed down. Why could this be happening? Well, let's look at what's occurring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Ameren has fallen short of achieving a 20% return on equity (ROE), recording 9.6% instead. Furthermore, its return on assets (ROA) of 3.9% is below the US Integrated Utilities industry of 4.1%, 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 6.4% to 4.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 105% to 125% over the past 5 years.
What does this mean?
Ameren'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 unpredictable earnings, can have many factors influencing its business. I recommend you continue to research Ameren to get a better picture 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 2020. This may not be consistent with full year annual report figures.
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