For long-term investors, assessing earnings trend over time and against industry benchmarks is more beneficial than examining a single earnings announcement at a point in time. Investors may find my commentary, albeit very high-level and brief, on American National Insurance Company (NASDAQ:ANAT) useful as an attempt to give more color around how American National Insurance is currently performing.
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How Well Did ANAT Perform?
ANAT's trailing twelve-month earnings (from 31 March 2019) of US$398m has declined by -16% compared to the previous year.
Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13%, indicating the rate at which ANAT is growing has slowed down. Why could this be happening? Let's examine what's going on with margins and if the rest of the industry is feeling the heat.
In terms of returns from investment, American National Insurance has fallen short of achieving a 20% return on equity (ROE), recording 7.1% instead. Furthermore, its return on assets (ROA) of 1.4% is below the US Insurance industry of 2.6%, indicating American National Insurance's are utilized less efficiently. However, its return on capital (ROC), which also accounts for American National Insurance’s debt level, has increased over the past 3 years from 0.9% to 1.6%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 2.6% to 2.5% over the past 5 years.
What does this mean?
Though American National Insurance's past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research American National Insurance to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ANAT’s future growth? Take a look at our free research report of analyst consensus for ANAT’s outlook.
- Financial Health: Are ANAT’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 31 March 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 email@example.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.