Where United Fire Group Inc (NASDAQ:UFCS) Stands In Terms Of Earnings Growth Against Its Industry

Examining United Fire Group Inc’s (NASDAQ:UFCS) past track record of performance is an insightful exercise for investors. It allows us to reflect on whether or not the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess UFCS’s latest performance announced on 30 June 2018 and compare these figures to its longer term trend and industry movements.

View our latest analysis for United Fire Group

Did UFCS’s recent earnings growth beat the long-term trend and the industry?

UFCS’s trailing twelve-month earnings (from 30 June 2018) of US$47m has jumped 10% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -7.0%, indicating the rate at which UFCS is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if United Fire Group has experienced some company-specific growth.

NasdaqGS:UFCS Income Statement Export October 30th 18
NasdaqGS:UFCS Income Statement Export October 30th 18

In terms of returns from investment, United Fire Group has fallen short of achieving a 20% return on equity (ROE), recording 4.8% instead. Furthermore, its return on assets (ROA) of 1.6% is below the US Insurance industry of 2.1%, indicating United Fire Group’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for United Fire Group’s debt level, has declined over the past 3 years from 4.4% to 1.7%.

What does this mean?

Though United Fire Group’s past data is helpful, it is only one aspect of my investment thesis. Recent positive growth doesn’t necessarily mean it’s onwards and upwards for the company. There could be variables that are influencing the industry as a whole, thus the high industry growth rate over the same time period. I suggest you continue to research United Fire Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for UFCS’s future growth? Take a look at our free research report of analyst consensus for UFCS’s outlook.
  2. Financial Health: Are UFCS’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.
  3. 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 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 editorial-team@simplywallst.com.