By Rob Otman
Ameren (NYSE: AEE) is a large cap company that operates within the multi-utilities industry. Its market cap is $15 billion today, and the total one-year return is 31.51% for shareholders.
Ameren stock is beating the market, and it reports earnings soon. But does that make it a good buy today? To answer this question, we’ve turned to the Investment U Stock Grader. Our Research Team built this system to diagnose the financial health of a company.
Our system looks at six key metrics…
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✗ Earnings-per-Share (EPS) Growth: Ameren reported a recent EPS growth rate of 29.51%. That’s below the multi-utilities industry average of 213.5%. That’s not a good sign. We like to see companies that have higher earnings growth.
✓ Price-to-Earnings (P/E): The average price-to-earnings ratio of the multi-utilities industry is 42.3. And Ameren’s ratio comes in at 21.58. It’s trading at a better value than many of its competitors.
✓ Debt-to-Equity: The debt-to-equity ratio for Ameren stock is 113.58%. That’s below the multi-utilities industry average of 146.19%. The company is less leveraged.
✗ Free Cash Flow per Share Growth: Ameren’s FCF has been lower than that of its competitors over the last year. That’s not good for investors. In general, if a company is growing its FCF, it will be able to pay down debt, buy back stock, pay out more in dividends and/or invest money back into the business to help boost growth. It’s one of our most important fundamental factors.
✓ Profit Margins: The profit margin of Ameren comes in at 12.55% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Ameren’s profit margin is above the multi-utilities average of 9.05%. So that’s a positive indicator for investors.
✓ Return on Equity: Return on equity tells us how much profit a company produces with the money shareholders invest. The ROE for Ameren is 9.89%, and that’s above its industry average ROE of -8.35%.
Ameren stock passes four of our six key metrics today. That’s why our Investment U Stock Grader rates it as a Buy With Caution.
Please note that our fundamental factor checklist is just the first step in performing your own due diligence. There are many other factors you should consider before investing. That’s why The Oxford Club offers more than a dozen newsletters and trading advisories all aimed at helping investors grow and maintain their wealth.
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Source:: Investment You
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