Increase in profitability and industry-beating performance can be essential considerations in a stock for some investors. In this article, I will take a look at Primerica, Inc.'s (NYSE:PRI) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
Was PRI's recent earnings decline indicative of a tough track record?
PRI's trailing twelve-month earnings (from 30 September 2019) of US$358m has declined by -11% 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 18%, indicating the rate at which PRI is growing has slowed down. Why is this? Well, let's look at what's going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Primerica has invested its equity funds well leading to a 22% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 3.2% exceeds the US Insurance industry of 2.3%, indicating Primerica has used its assets more efficiently. And finally, its return on capital (ROC), which also accounts for Primerica’s debt level, has increased over the past 3 years from 3.5% to 4.3%.
What does this mean?
Primerica's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. Companies that are profitable, but have unpredictable earnings, can have many factors influencing its business. I suggest you continue to research Primerica to get a more holistic view of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for PRI’s future growth? Take a look at our free research report of analyst consensus for PRI’s outlook.
- Financial Health: Are PRI’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 September 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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