How Fidelity National Financial Inc’s (NYSE:FNF) Earnings Growth Stacks Up Against The Industry
Measuring Fidelity National Financial Inc’s (NYSE:FNF) track record of past performance is a useful exercise for investors. It enables 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 FNF’s recent performance announced on 31 March 2018 and weigh these figures against its long-term trend and industry movements. View out our latest analysis for Fidelity National Financial
Did FNF perform better than its track record and industry?
FNF’s trailing twelve-month earnings (from 31 March 2018) of US$554.00m has declined by -1.25% compared to the previous year. Furthermore, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 7.99%, indicating the rate at which FNF is growing has slowed down. Why could this be happening? Well, let’s look at what’s going on with margins and whether the whole industry is facing the same headwind.
Over the last few years, revenue growth has been lagging behind which suggests that Fidelity National Financial’s bottom line has been driven by unsustainable cost-cutting. Scanning growth from a sector-level, the US insurance industry has been growing, albeit, at a muted single-digit rate of 3.77% in the prior year, and 8.26% over the last five years. This means any recent headwind the industry is experiencing, it’s hitting Fidelity National Financial harder than its peers.
In terms of returns from investment, Fidelity National Financial has not invested its equity funds well, leading to a 14.04% return on equity (ROE), below the sensible minimum of 20%. However, its return on assets (ROA) of 6.62% exceeds the US Insurance industry of 1.69%, indicating Fidelity National Financial has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Fidelity National Financial’s debt level, has increased over the past 3 years from 11.29% to 13.38%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 28.40% to 15.51% over the past 5 years.
What does this mean?
Though Fidelity National Financial’s past data is helpful, it is only one aspect of my investment thesis. Companies that are profitable, but have volatile earnings, can have many factors affecting its business. I suggest you continue to research Fidelity National Financial to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for FNF’s future growth? Take a look at our free research report of analyst consensus for FNF’s outlook.
Financial Health: Is FNF’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 March 2018. This may not be consistent with full year annual report figures.
To help readers see pass 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.
