Measuring Chubb Limited's (NYSE:CB) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess CB's recent performance announced on 31 December 2019 and compare these figures to its historical trend and industry movements.
Did CB beat its long-term earnings growth trend and its industry?
CB's trailing twelve-month earnings (from 31 December 2019) of US$4.5b has jumped 12% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 9.1%, indicating the rate at which CB is growing has accelerated. What's enabled this growth? Well, let’s take a look at whether it is merely due to an industry uplift, or if Chubb has experienced some company-specific growth.
In terms of returns from investment, Chubb has fallen short of achieving a 20% return on equity (ROE), recording 8.0% instead. Furthermore, its return on assets (ROA) of 2.8% is below the US Insurance industry of 3.1%, indicating Chubb's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Chubb’s debt level, has declined over the past 3 years from 7.7% to 6.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 26% to 32% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I suggest 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 December 2019. This may not be consistent with full year annual report figures.
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.
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