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After reading FBL Financial Group, Inc.'s (NYSE:FFG) latest earnings update (31 December 2019), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether FFG has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
Did FFG's recent earnings growth beat the long-term trend and the industry?
FFG's trailing twelve-month earnings (from 31 December 2019) of US$126m has jumped 35% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 3.7%, indicating the rate at which FFG is growing has accelerated. What's the driver of this growth? Well, let’s take a look at whether it is solely due to industry tailwinds, or if FBL Financial Group has seen some company-specific growth.
In terms of returns from investment, FBL Financial Group has fallen short of achieving a 20% return on equity (ROE), recording 8.5% instead. Furthermore, its return on assets (ROA) of 1.3% is below the US Insurance industry of 2.7%, indicating FBL Financial Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for FBL Financial Group’s debt level, has declined over the past 3 years from 1.6% to 1.5%.
What does this mean?
Though FBL Financial Group's past data is helpful, it is only one aspect of my investment thesis. While FBL Financial Group 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 FBL Financial Group to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for FFG’s future growth? Take a look at our free research report of analyst consensus for FFG’s outlook.
Financial Health: Are FFG’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 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.
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