Yahoo Finance Where Pennon Group Plc (LON:PNN) Stands In Terms Of Earnings Growth Against Its Industry
Assessing Pennon Group Plc's (LON:PNN) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess PNN's recent performance announced on 31 March 2019 and evaluate these figures to its long-term trend and industry movements.
Check out our latest analysis for Pennon Group
Commentary On PNN's Past Performance
PNN's trailing twelve-month earnings (from 31 March 2019) of UK£214m has increased by 6.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 14%, indicating the rate at which PNN is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and whether the entire industry is facing the same headwind.
In terms of returns from investment, Pennon Group has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. Furthermore, its return on assets (ROA) of 4.4% is below the GB Water Utilities industry of 4.4%, indicating Pennon Group's are utilized less efficiently. However, its return on capital (ROC), which also accounts for Pennon Group’s debt level, has increased over the past 3 years from 4.9% to 5.8%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 130% to 126% over the past 5 years.
What does this mean?
Though Pennon Group's past data is helpful, it is only one aspect of my investment thesis. While Pennon Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Pennon Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PNN’s future growth? Take a look at our free research report of analyst consensus for PNN’s outlook.
Financial Health: Are PNN’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.
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.
