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Assessing American Equity Investment Life Holding Company's (NYSE:AEL) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess AEL's recent performance announced on 31 March 2019 and evaluate these figures to its longer term trend and industry movements.
Did AEL's recent earnings growth beat the long-term trend and the industry?
AEL's trailing twelve-month earnings (from 31 March 2019) of US$287m has increased by 9.7% 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 20%, indicating the rate at which AEL is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and if the whole industry is feeling the heat.
In terms of returns from investment, American Equity Investment Life Holding has fallen short of achieving a 20% return on equity (ROE), recording 9.8% instead. Furthermore, its return on assets (ROA) of 0.5% is below the US Insurance industry of 2.5%, indicating American Equity Investment Life Holding's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for American Equity Investment Life Holding’s debt level, has declined over the past 3 years from 0.7% to 0.6%.
What does this mean?
American Equity Investment Life Holding'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 American Equity Investment Life Holding gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. You should continue to research American Equity Investment Life Holding to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for AEL’s future growth? Take a look at our free research report of analyst consensus for AEL’s outlook.
- Financial Health: Are AEL’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.