Examining Gjensidige Forsikring ASA’s (OB:GJF) past track record of performance is a useful exercise for investors. It allows us to reflect on whether the company has met or exceed expectations, which is a powerful signal for future performance. Below, I will assess GJF’s latest performance announced on 30 June 2018 and weight these figures against its longer term trend and industry movements.
How Well Did GJF Perform?
GJF’s trailing twelve-month earnings (from 30 June 2018) of øre3.9b has declined by -14% 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 2.9%, indicating the rate at which GJF is growing has slowed down. Why could this be happening? Let’s examine what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Gjensidige Forsikring has fallen short of achieving a 20% return on equity (ROE), recording 18% instead. However, its return on assets (ROA) of 2.5% exceeds the NO Insurance industry of 1.2%, indicating Gjensidige Forsikring has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Gjensidige Forsikring’s debt level, has declined over the past 3 years from 9.5% to 6.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 37% to 129% over the past 5 years.
What does this mean?
Gjensidige Forsikring’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. In some cases, companies that endure an extended period of reduction in earnings are going through some sort of reinvestment phase Although, if the whole industry is struggling to grow over time, it may be a sign of a structural change, which makes Gjensidige Forsikring and its peers a riskier investment. I suggest you continue to research Gjensidige Forsikring to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for GJF’s future growth? Take a look at our free research report of analyst consensus for GJF’s outlook.
- Financial Health: Are GJF’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 30 June 2018. This may not be consistent with full year annual report figures.
To help readers see past 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. For errors that warrant correction please contact the editor at email@example.com.