Examining Primerica, Inc.’s (NYSE:PRI) 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 PRI’s latest performance announced on 31 December 2018 and weight these figures against its longer term trend and industry movements.
Was PRI’s weak performance lately a part of a long-term decline?
PRI’s trailing twelve-month earnings (from 31 December 2018) of US$322m has declined by -7.3% 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 19%, indicating the rate at which PRI is growing has slowed down. What could be happening here? Let’s examine what’s occurring with margins and if the entire industry is facing the same headwind.
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 3.1% exceeds the US Insurance industry of 2.2%, 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 3.4% to 4.2%.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that are profitable, but have volatile earnings, can have many factors impacting 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 31 December 2018. This may not be consistent with full year annual report figures.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Thank you for reading.