Examining how Mapfre SA (BME:MAP) is performing as a company requires looking at more than just a years’ earnings. Below, I will run you through a simple sense check to build perspective on how Mapfre is doing by comparing its most recent earnings with its historical trend, in addition to the performance of its insurance industry peers.
How Did MAP’s Recent Performance Stack Up Against Its Past?
MAP’s trailing twelve-month earnings (from 30 June 2018) of €671m has declined by -17% 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 -1.6%, indicating the rate at which MAP is growing has slowed down. What could be happening here? Well, let’s look at what’s transpiring with margins and whether the entire industry is feeling the heat.
In terms of returns from investment, Mapfre has fallen short of achieving a 20% return on equity (ROE), recording 10% instead. Furthermore, its return on assets (ROA) of 1.1% is below the ES Insurance industry of 1.2%, indicating Mapfre’s are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Mapfre’s debt level, has declined over the past 3 years from 3.9% to 3.2%. 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?
Though Mapfre’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that endure a prolonged period of reduction in earnings are undergoing some sort of reinvestment phase However, if the whole industry is struggling to grow over time, it may be a sign of a structural change, which makes Mapfre and its peers a higher risk investment. You should continue to research Mapfre to get a better picture of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for MAP’s future growth? Take a look at our free research report of analyst consensus for MAP’s outlook.
- Financial Health: Are MAP’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.