Understanding how Fidelity National Financial, Inc. (NYSE:FNF) is performing as a company requires looking at more than just a years' earnings. Today I will run you through a basic sense check to gain perspective on how Fidelity National Financial is doing by comparing its latest earnings with its long-term trend as well as the performance of its insurance industry peers.
Did FNF beat its long-term earnings growth trend and its industry?
FNF's trailing twelve-month earnings (from 31 December 2018) of US$628m has jumped 24% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 11%, indicating the rate at which FNF is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is merely due to an industry uplift, or if Fidelity National Financial has experienced some company-specific growth.
In terms of returns from investment, Fidelity National Financial has fallen short of achieving a 20% return on equity (ROE), recording 13% instead. However, its return on assets (ROA) of 7.2% exceeds the US Insurance industry of 2.2%, indicating Fidelity National Financial has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Fidelity National Financial’s debt level, has increased over the past 3 years from 7.5% to 9.7%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 24% to 17% over the past 5 years.
What does this mean?
Though Fidelity National Financial's past data is helpful, it is only one aspect of my investment thesis. While Fidelity National Financial has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Fidelity National Financial to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for FNF’s future growth? Take a look at our free research report of analyst consensus for FNF’s outlook.
- Financial Health: Are FNF’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 December 2018. 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.