Yahoo Finance Did Prudential plc's (LON:PRU) Recent Earnings Growth Beat The Trend?
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When Prudential plc (LON:PRU) announced its most recent earnings (31 December 2018), I compared it against two factor: its historical earnings track record, and the performance of its industry peers on average. Being able to interpret how well Prudential has done so far requires weighing its performance against a benchmark, rather than looking at a standalone number at a point in time. In this article, I've summarized the key takeaways on how I see PRU has performed.
See our latest analysis for Prudential
Commentary On PRU's Past Performance
PRU's trailing twelve-month earnings (from 31 December 2018) of UK£3.0b has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 6.2%, indicating the rate at which PRU is growing has accelerated. What's the driver of this growth? Well, let’s take a look at if it is solely owing to industry tailwinds, or if Prudential has experienced some company-specific growth.
In terms of returns from investment, Prudential has fallen short of achieving a 20% return on equity (ROE), recording 17% instead. Furthermore, its return on assets (ROA) of 0.7% is below the GB Insurance industry of 1.5%, indicating Prudential's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Prudential’s debt level, has declined over the past 3 years from 0.9% to 0.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 101% to 113% over the past 5 years.
What does this mean?
Prudential's track record can be a valuable insight into its earnings performance, but it certainly doesn't tell the whole story. While Prudential has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Prudential to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for PRU’s future growth? Take a look at our free research report of analyst consensus for PRU’s outlook.
Financial Health: Are PRU’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 editorial-team@simplywallst.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.
