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Understanding Chubb Limited's (NYSE:CB) performance as a company requires examining more than earnings from one point in time. Today I will take you through a basic sense check to gain perspective on how Chubb is doing by evaluating its latest earnings with its longer term trend as well as its industry peers' performance over the same period.
Did CB perform better than its track record and industry?
CB's trailing twelve-month earnings (from 31 March 2019) of US$3.9b has increased by 1.8% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 8.6%, indicating the rate at which CB is growing has slowed down. What could be happening here? Well, let’s take a look at what’s going on with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Chubb has fallen short of achieving a 20% return on equity (ROE), recording 7.5% instead. However, its return on assets (ROA) of 2.7% exceeds the US Insurance industry of 2.6%, indicating Chubb has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Chubb’s debt level, has increased over the past 3 years from 5.2% to 6.3%.
What does this mean?
Chubb'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 Chubb gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Chubb to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for CB’s future growth? Take a look at our free research report of analyst consensus for CB’s outlook.
- Financial Health: Are CB’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 firstname.lastname@example.org. 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.