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Has Spire Inc. (NYSE:SR) Improved Earnings In Recent Times?

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After reading Spire Inc.'s (NYSE:SR) most recent earnings announcement (31 March 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

Check out our latest analysis for Spire

Commentary On SR's Past Performance

SR's trailing twelve-month earnings (from 31 March 2019) of US$221m has declined by -0.3% compared to the previous year.

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Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 17%, indicating the rate at which SR is growing has slowed down. Why could this be happening? Let's examine what's occurring with margins and if the rest of the industry is facing the same headwind.

NYSE:SR Income Statement, June 4th 2019
NYSE:SR Income Statement, June 4th 2019

In terms of returns from investment, Spire has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. Furthermore, its return on assets (ROA) of 4.4% is below the US Gas Utilities industry of 4.5%, 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 6.0% to 5.9%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 78% to 115% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors impacting its business. I recommend you continue to research Spire to get a more holistic view of the stock by looking at:

  1. 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.

  2. 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.

  3. 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 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. Thank you for reading.