Yahoo Finance Should You Be Happy With Admiral Group plc's (LON:ADM) 9.4% Earnings Growth?
Assessing Admiral Group plc's (LSE:ADM) past track record of performance is a valuable exercise for investors. It enables us to reflect on whether the company has met or exceed expectations, which is a great indicator for future performance. Today I will assess ADM's recent performance announced on 31 December 2019 and evaluate these figures to its longer term trend and industry movements.
Check out our latest analysis for Admiral Group
Were ADM's earnings stronger than its past performances and the industry?
ADM's trailing twelve-month earnings (from 31 December 2019) of UK£432m has increased by 9.4% 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 9.4%, indicating the rate at which ADM is growing has slowed down. What could be happening here? Well, let's examine what's going on with margins and whether the rest of the industry is feeling the heat.
In terms of returns from investment, Admiral Group has invested its equity funds well leading to a 47% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 6.0% exceeds the GB Insurance industry of 1.3%, indicating Admiral Group has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Admiral Group’s debt level, has declined over the past 3 years from 14% to 14%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 35% to 58% over the past 5 years.
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? You should continue to research Admiral Group to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for ADM’s future growth? Take a look at our free research report of analyst consensus for ADM’s outlook.
Financial Health: Are ADM’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 2019. This may not be consistent with full year annual report figures.
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.
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. Thank you for reading.
