Yahoo Finance Was National Fuel Gas Company's (NYSE:NFG) Earnings Decline Part Of A Broader Industry Downturn?
When National Fuel Gas Company (NYSE:NFG) released its most recent earnings update (31 December 2019), 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 National Fuel Gas 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 NFG has performed.
Check out our latest analysis for National Fuel Gas
Despite a decline, did NFG underperform the long-term trend and the industry?
NFG's trailing twelve-month earnings (from 31 December 2019) of US$288m has declined by -2.5% 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 41%, indicating the rate at which NFG is growing has slowed down. What could be happening here? Well, let's look at what's going on with margins and if the whole industry is feeling the heat.
In terms of returns from investment, National Fuel Gas has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 5.9% exceeds the US Gas Utilities industry of 4.3%, indicating National Fuel Gas has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for National Fuel Gas’s debt level, has declined over the past 3 years from 11% to 7.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 70% to 104% over the past 5 years.
What does this mean?
Though National Fuel Gas's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors influencing its business. I suggest you continue to research National Fuel Gas to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for NFG’s future growth? Take a look at our free research report of analyst consensus for NFG’s outlook.
Financial Health: Are NFG’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 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.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.
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