Why Avangrid Stock Is Rated a "Hold With Caution" Before Earnings
Avangrid (NYSE: AGR) is a $14 billion company today. Investors that bought shares one year ago are sitting on a -1.2% total return. That's below the S&P 500's return of 15.88%.
Avangrid stock is underperforming the market. It's beaten down, but it reports earnings next week. So is it a good time to buy? 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...
✗ Earnings-per-Share (EPS) Growth: Avangrid reported a recent EPS growth rate of 11.59%. That's below the electric utilities industry average of 45.48%. 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 electric utilities industry is 17.83. And Avangrid's ratio comes in at 21.4. Its valuation looks expensive compared to many of its competitors.
✓ Debt-to-Equity : The debt-to-equity ratio for Avangrid stock is 34.09%. That's below the electric utilities industry average of 135.52%. The company is less leveraged.
✓ Free Cash Flow per Share Growth : Avangrid's FCF has been higher than that of its competitors over the last year. That's 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 Avangrid comes in at 13.59% today. And generally, the higher, the better. We also like to see this margin above that of its competitors. Avangrid's profit margin is below the electric utilities average of 21.97%. So that's a negative indicator for investors.
✗ Return on Equity : Return on equity gives us a look at the amount of net income returned to shareholders. The ROE for Avangrid is 4.33%, and that's below its industry average ROE of 7.66%.
Avangrid stock passes two of our six key metrics today. That's why our Investment U Stock Grader rates it as a Hold 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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