Analyzing Stewart Information Services Corporation’s (NYSE:STC) track record of past performance is a valuable exercise for investors. It enables us to reflect on whether or not the company has met expectations, which is a powerful signal for future performance. Today I will assess STC’s recent performance announced on 30 September 2018 and compare these figures to its long-term trend and industry movements.
Did STC’s recent earnings growth beat the long-term trend and the industry?
STC’s trailing twelve-month earnings (from 30 September 2018) of US$51m has increased by 1.8% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -2.4%, indicating the rate at which STC is growing has accelerated. How has it been able to do this? Let’s take a look at whether it is solely due to an industry uplift, or if Stewart Information Services has experienced some company-specific growth.
In terms of returns from investment, Stewart Information Services has fallen short of achieving a 20% return on equity (ROE), recording 9.2% instead. However, its return on assets (ROA) of 4.0% exceeds the US Insurance industry of 2.4%, indicating Stewart Information Services has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Stewart Information Services’s debt level, has declined over the past 3 years from 12% to 9.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 5.0% to 16% over the past 5 years.
What does this mean?
Stewart Information Services’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Companies that have performed well in the past, such as Stewart Information Services gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Stewart Information Services to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for STC’s future growth? Take a look at our free research report of analyst consensus for STC’s outlook.
- Financial Health: Are STC’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.