Capital Expenditure: 2017 Remains Stagnant

Capital expenditure 2017 results

A review of the last 5 years of Capex in 3 select sectors reveals there has been no recent boost in this metric

We used the Economatica system to aggregate capital expenditures for the 3 highest spending sectors over the past 5 years. The highest spending sectors in Capex are Utilities, Transportation & Warehousing, and Mining, Quarrying, & Oil Gas Extraction.

The Economatica system offers analysts two different metrics to analyze Capital Expenditures. And, in this report, we employed both methods: Capital Expenditures including Investments and Capital Expenditures excluding investments. We determined there have been no significant increases in Capex using either methodology in these three sectors.

We aggregated the data for the companies that have provided their Q4 2017 financial statements. This group consisted of 59 participating companies in the Utilities sector, 49 in the Transportation sector, and 68 in Mining.

The chart below shows Capital Expenditures excluding investments) for these sectors. This metric is defined by the Economatica system as Net PPE (Property, Plant, and Equipment).

We observed Capex excluding investments five years ago in 2013 to be $663 million for Utilities, $361 million for Transportation, and $666 million for Mining. Comparing these values to last year in 2017 we can see that spending is much less for both the Utilities and Mining sectors while Capex is only $9 million higher for the participating companies in the Transportation sector.

Only in 2014 did Capex jump higher for all three sectors relative to 2013. What appears to have happened beginning in 2015 is a stable yet identifiably downward trend culminating in $589 million, $370 million, and $234 million being spent by Utilities, Transportation, and Mining companies in 2017, respectively.

We observed the same general trend when examining Capital Expenditures including investments. This metric is defined in the Economatica system as: Net PPE + Net Investments.

Capex including investments for the Utilities sector in 2013 was $753 million, increasing to $909 million in 2014. Utilities spent slightly less on capital expenditures in 2015, then invested considerably more in 2016. Last year, this sector’s Capex value was lower than all previous years examined.

Transportation companies saw Capex grow from $443 million in 2013 to $660 million the next year. Capex dropped again in 2015 to $588 million and also in 2016. The sector’s Capex was $593 million in 2017, $150 million more than 5 years ago.

The Mining sector exhibited relatively consistent Capex values from 2013 until 2015 where the metric was between $595 and $712 million. Capex then dropped considerably in 2016 to $240 million, the lowest value in the period examined, and ended 2017 increasing moderately to $349 million.

Again we observe a stable yet clearly downward trend for capital expenditures including investments.

The Economatica system offers a range of sophisticated analytic tools and financial data on an easy to use online research platform that empowers asset managers, analysts, and other investment professionals who conduct fundamental and quantitative analysis. Ask us for a free 14-day trial today and learn how to make your own observations.