Examining how ICICI Lombard General Insurance Company Limited (NSEI:ICICIGI) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how ICICI Lombard General Insurance is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its insurance industry peers.
How ICICIGI fared against its long-term earnings performance and its industry
ICICIGI’s trailing twelve-month earnings (from 30 September 2019) of ₹11b has increased by 5.7% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 19%, indicating the rate at which ICICIGI is growing has slowed down. What could be happening here? Well, let’s look at what’s occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, ICICI Lombard General Insurance has fallen short of achieving a 20% return on equity (ROE), recording 19% instead. However, its return on assets (ROA) of 3.2% exceeds the IN Insurance industry of 0.8%, indicating ICICI Lombard General Insurance has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for ICICI Lombard General Insurance’s debt level, has increased over the past 3 years from 18% to 26%.
What does this mean?
Though ICICI Lombard General Insurance’s past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as ICICI Lombard General Insurance gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research ICICI Lombard General Insurance to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ICICIGI’s future growth? Take a look at our free research report of analyst consensus for ICICIGI’s outlook.
- Financial Health: Are ICICIGI’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 September 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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