Improvement in profitability and outperformance against the industry can be important characteristics in a stock for some investors. Below, I will assess The National Security Group Inc’s (NASDAQ:NSEC) 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. Check out our latest analysis for National Security Group
Did NSEC perform worse than its track record and industry?
For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique allows me to analyze many different companies on a similar basis, using new information. For National Security Group, its most recent trailing-twelve-month earnings is -US$1.20M, which, against the prior year’s level, has turned from positive to negative. Since these figures are relatively short-term thinking, I’ve calculated an annualized five-year figure for NSEC’s earnings, which stands at US$1.22M.
We can further evaluate National Security Group’s loss by looking at what the industry has been experiencing over the past few years. Each year, for the past five years National Security Group’s revenue growth has been somewhat subdued, with an annual growth rate of 1.37%, on average. The company’s inability to breakeven has been aided by the relatively flat top-line in the past. Viewing growth from a sector-level, the US insurance industry has been growing, albeit, at a subdued single-digit rate of 9.14% over the previous twelve months, and 8.13% over the last five years. This means that whatever tailwind the industry is enjoying, National Security Group has not been able to gain as much as its industry peers.
What does this mean?
Though National Security Group’s past data is helpful, it is only one aspect of my investment thesis. Companies that incur net loss is always difficult to envisage what will happen in the future and when. The most valuable step is to examine company-specific issues National Security Group may be facing and whether management guidance has regularly been met in the past. You should continue to research National Security Group to get a better picture of the stock by looking at:
- Financial Health: Is NSEC’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 2017. 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.