After reading The Hartford Financial Services Group, Inc.’s (NYSE:HIG) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether HIG has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
How HIG fared against its long-term earnings performance and its industry
HIG’s trailing twelve-month earnings (from 31 December 2019) of US$2.1b has jumped 40% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -0.9%, indicating the rate at which HIG is growing has accelerated. How has it been able to do this? Let’s see whether it is only due to industry tailwinds, or if Hartford Financial Services Group has experienced some company-specific growth.
In terms of returns from investment, Hartford Financial Services Group has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 3.3% exceeds the US Insurance industry of 2.6%, indicating Hartford Financial Services Group has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Hartford Financial Services Group’s debt level, has increased over the past 3 years from 1.4% to 4.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 33% to 29% over the past 5 years.
What does this mean?
Though Hartford Financial Services Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Hartford Financial Services Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Hartford Financial Services Group to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HIG’s future growth? Take a look at our free research report of analyst consensus for HIG’s outlook.
- Financial Health: Are HIG’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 31 December 2019. This may not be consistent with full year annual report figures.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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