Examining W R Berkley Corporation’s (NYSE:WRB) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess WRB’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
Could WRB beat the long-term trend and outperform its industry?
WRB’s trailing twelve-month earnings (from 30 June 2018) of US$663.1m has increased by 9.4% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 4.6%, indicating the rate at which WRB is growing has accelerated. What’s the driver of this growth? Well, let’s take a look at if it is only owing to an industry uplift, or if W. R. Berkley has experienced some company-specific growth.
The climb in earnings seems to be driven by a solid top-line increase outstripping its growth rate of costs. Though this has caused a margin contraction, it has made W. R. Berkley more profitable.
Eyeballing growth from a sector-level, the US insurance industry has been growing its average earnings by double-digit 10.1% in the past twelve months, and a less exciting 6.7% over the past five. This growth is a median of profitable companies of 25 Insurance companies in US including ACMAT, Heritage Insurance Holdings and Everest Re Group. This means any tailwind the industry is profiting from, W. R. Berkley has not been able to reap as much as its average peer.
In terms of returns from investment, W. R. Berkley has fallen short of achieving a 20% return on equity (ROE), recording 12.2% instead. However, its return on assets (ROA) of 3.3% exceeds the US Insurance industry of 2.0%, indicating W. R. Berkley has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for W. R. Berkley’s debt level, has increased over the past 3 years from 4.3% to 9.5%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While W. R. Berkley 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 W. R. Berkley to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for WRB’s future growth? Take a look at our free research report of analyst consensus for WRB’s outlook.
- Financial Health: Are WRB’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.