Yahoo Finance Does Direct Line Insurance Group plc’s (LON:DLG) Past Performance Indicate A Stronger Future?
Examining Direct Line Insurance Group plc’s (LSE:DLG) 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 DLG’s latest performance announced on 31 December 2017 and weight these figures against its longer term trend and industry movements. See our latest analysis for Direct Line Insurance Group
How DLG fared against its long-term earnings performance and its industry
I prefer to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend allows me to analyze different stocks in a uniform manner using new information. For Direct Line Insurance Group, its most recent earnings (trailing twelve month) is UK£434.00M, which, in comparison to the prior year’s level, has increased by a significant 55.67%. Since these values may be relatively nearsighted, I have determined an annualized five-year figure for Direct Line Insurance Group’s net income, which stands at UK£310.48M This means that, on average, Direct Line Insurance Group has been able to increasingly grow its net income over the past couple of years as well.
How has it been able to do this? Well, let’s take a look at whether it is only attributable to an industry uplift, or if Direct Line Insurance Group has experienced some company-specific growth. In the last few years, Direct Line Insurance Group expanded bottom-line, while its top-line fell, by successfully controlling its costs. This has caused to a margin expansion and profitability over time. Looking at growth from a sector-level, the UK insurance industry has been growing its average earnings by double-digit 33.83% over the past twelve months, and a more subdued 9.93% over the past half a decade. This means that any uplift the industry is benefiting from, Direct Line Insurance Group is capable of leveraging this to its advantage.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability? I recommend you continue to research Direct Line Insurance Group to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for DLG’s future growth? Take a look at our free research report of analyst consensus for DLG’s outlook.
Financial Health: Is DLG’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.
