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Does Enstar Group Limited's (NASDAQ:ESGR) Recent Track Record Look Strong?

Simply Wall St

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When Enstar Group Limited (NASDAQ:ESGR) announced its most recent earnings (31 March 2019), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Enstar Group has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see ESGR has performed.

See our latest analysis for Enstar Group

Did ESGR beat its long-term earnings growth trend and its industry?

ESGR's trailing twelve-month earnings (from 31 March 2019) of US$238m has jumped 16% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -12%, indicating the rate at which ESGR is growing has accelerated. What's the driver of this growth? Let's take a look at whether it is solely attributable to an industry uplift, or if Enstar Group has seen some company-specific growth.

NasdaqGS:ESGR Income Statement, June 5th 2019
NasdaqGS:ESGR Income Statement, June 5th 2019

In terms of returns from investment, Enstar Group has fallen short of achieving a 20% return on equity (ROE), recording 4.1% instead. Furthermore, its return on assets (ROA) of 1.5% is below the US Insurance industry of 2.6%, indicating Enstar Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Enstar Group’s debt level, has declined over the past 3 years from 2.1% to 1.2%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 20% to 24% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Enstar Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Enstar Group to get a more holistic view of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for ESGR’s future growth? Take a look at our free research report of analyst consensus for ESGR’s outlook.

  2. Financial Health: Are ESGR’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.

  3. 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 editorial-team@simplywallst.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.