Today I will take a look at Alleghany Corporation’s (NYSE:Y) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the insurance industry performed. As an investor, I find it beneficial to assess Y’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
Did Y perform better than its track record and industry?
Y’s trailing twelve-month earnings (from 30 June 2019) of US$309m has increased by 0.9% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -21%, indicating the rate at which Y is growing has accelerated. What’s enabled this growth? Let’s see if it is solely attributable to an industry uplift, or if Alleghany has experienced some company-specific growth.
In terms of returns from investment, Alleghany has fallen short of achieving a 20% return on equity (ROE), recording 3.8% instead. Furthermore, its return on assets (ROA) of 1.5% is below the US Insurance industry of 2.5%, indicating Alleghany’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Alleghany’s debt level, has declined over the past 3 years from 3.6% to 2.1%.
What does this mean?
Alleghany’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Recent positive growth isn’t always indicative of a continued optimistic outlook. I recommend you continue to research Alleghany to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for Y’s future growth? Take a look at our free research report of analyst consensus for Y’s outlook.
- Financial Health: Are Y’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 30 June 2019. This may not be consistent with full year annual report figures.
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