Diversified energy company Origin Energy (ASX: ORG) appears to have put its November 2012 profit downgrade woes behind it.
Origin shares power ahead
Late last year, investors were concerned not only by the downward revision to profit guidance but also potential funding issues surrounding projects which could have forced Origin to raise more funds. The share price subsequently plunged to $9.84.
However, the stock is pleasingly now trading back close to $13 a share.
Still, major energy companies have performed relatively poorly compared with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) over the past 12 months. While the index has managed to gain 18.1%, Origin has eked out a gain of just 1.9%, while peers Santos (ASX: STO) and AGL Energy (ASX: AGK) have returned 9.5% and -6.8% respectively.
Foolish takeaway
With all three of these energy companies are trading on trailing price-to-earnings ratios of over 20 times, it is a reminder for investors that capital gains are hard to come by if you purchase fully valued or over-priced stocks that subsequently don't deliver the growth that they are priced for.
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Motley Fool contributor Tim McArthur owns shares in Origin Energy.
