When EMC Insurance Group Inc (NASDAQ:EMCI) released its most recent earnings update (30 September 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Understanding how EMC Insurance Group performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see EMCI has performed.
How Did EMCI’s Recent Performance Stack Up Against Its Past?
EMCI’s trailing twelve-month earnings (from 30 September 2018) of US$40m has jumped 17% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.9%, indicating the rate at which EMCI is growing has accelerated. What’s the driver of this growth? Let’s take a look at whether it is only because of industry tailwinds, or if EMC Insurance Group has seen some company-specific growth.
In terms of returns from investment, EMC Insurance Group has fallen short of achieving a 20% return on equity (ROE), recording 7.0% instead. However, its return on assets (ROA) of 2.4% exceeds the US Insurance industry of 2.4%, indicating EMC Insurance Group has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for EMC Insurance Group’s debt level, has declined over the past 3 years from 6.3% to 3.1%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as EMC Insurance Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research EMC Insurance Group to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for EMCI’s future growth? Take a look at our free research report of analyst consensus for EMCI’s outlook.
- Financial Health: Are EMCI’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 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.