Understanding how Hannover Rück SE (XTRA:HNR1) 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 Hannover Rück is doing by comparing its latest earnings with its long-term trend as well as the performance of its insurance industry peers.
Could HNR1 beat the long-term trend and outperform its industry?
HNR1's trailing twelve-month earnings (from 31 December 2019) of €1.3b has jumped 21% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 2.0%, indicating the rate at which HNR1 is growing has accelerated. What's enabled this growth? Let's see if it is solely owing to industry tailwinds, or if Hannover Rück has seen some company-specific growth.
In terms of returns from investment, Hannover Rück has fallen short of achieving a 20% return on equity (ROE), recording 12% instead. However, its return on assets (ROA) of 2.1% exceeds the DE Insurance industry of 0.9%, indicating Hannover Rück has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Hannover Rück’s debt level, has declined over the past 3 years from 3.7% to 3.5%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 28% to 30% over the past 5 years.
What does this mean?
Though Hannover Rück's past data is helpful, it is only one aspect of my investment thesis. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? You should continue to research Hannover Rück to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for HNR1’s future growth? Take a look at our free research report of analyst consensus for HNR1’s outlook.
- Financial Health: Are HNR1’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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