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Alleghany Corporation (NYSE:Y): Did It Outperform The Industry?

Simply Wall St

After looking at Alleghany Corporation's (NYSE:Y) latest earnings announcement (30 June 2019), I found it useful to revisit the company's performance in the past couple of years and assess this against the most recent figures. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

See our latest analysis for Alleghany

How Well Did Y Perform?

Y's trailing twelve-month earnings (from 30 June 2019) of US$309m has increased by 0.9% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -21%, indicating the rate at which Y is growing has accelerated. What's enabled this growth? Let's see whether it is only a result of industry tailwinds, or if Alleghany has experienced some company-specific growth.

NYSE:Y Income Statement, August 19th 2019

In terms of returns from investment, Alleghany has fallen short of achieving a 20% return on equity (ROE), recording 3.8% instead. Furthermore, its return on assets (ROA) of 1.5% is below the US Insurance industry of 2.5%, indicating Alleghany's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Alleghany’s debt level, has declined over the past 3 years from 3.6% to 2.1%.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Recent positive growth isn't always indicative of a continued optimistic outlook. I recommend you continue to research Alleghany to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for Y’s future growth? Take a look at our free research report of analyst consensus for Y’s outlook.
  2. Financial Health: Are Y’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 2019. This may not be consistent with full year annual report figures.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.