Yahoo Finance Does Legal & General Group Plc's (LON:LGEN) Past Performance Indicate A Stronger Future?
Today I will take a look at Legal & General Group Plc's (LSE:LGEN) most recent earnings update (30 June 2019) and compare these latest figures against its performance over the past few years, as well as how the rest of the insurance industry performed. As an investor, I find it beneficial to assess LGEN’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
View our latest analysis for Legal & General Group
How Well Did LGEN Perform?
LGEN's trailing twelve-month earnings (from 30 June 2019) of UK£1.9b has jumped 14% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 15%, indicating the rate at which LGEN is growing has slowed down. What could be happening here? Well, let’s take a look at what’s transpiring with margins and if the rest of the industry is experiencing the hit as well.
In terms of returns from investment, Legal & General Group has invested its equity funds well leading to a 21% return on equity (ROE), above the sensible minimum of 20%. However, its return on assets (ROA) of 0.4% is below the GB Insurance industry of 1.4%, indicating Legal & General Group's are utilized less efficiently. Though, its return on capital (ROC), which also accounts for Legal & General Group’s debt level, has increased over the past 3 years from 0.3% to 0.5%. This correlates with a decrease in debt holding, with debt-to-equity ratio declining from 63% to 52% over the past 5 years.
What does this mean?
While past data is useful, it doesn’t tell the whole story. Companies that have performed well in the past, such as Legal & General Group gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I suggest you continue to research Legal & General Group to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for LGEN’s future growth? Take a look at our free research report of analyst consensus for LGEN’s outlook.
Financial Health: Are LGEN’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 June 2019. 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.
