Investors with a long-term horizong may find it valuable to assess ICC Holdings Inc’s (NASDAQ:ICCH) earnings trend over time and against its industry benchmark as opposed to simply looking at a sincle earnings announcement at one point in time. Below is my commentary, albiet very simple and high-level, on how ICC Holdings is currently performing. See our latest analysis for ICC Holdings

Was ICCH’s weak performance lately a part of a long-term decline?

I prefer to use the ‘latest twelve-month’ data, which annualizes the most recent half-year data, or in some cases, the latest annual report is already the most recent financial year data. This technique enables me to analyze different companies on a more comparable basis, using new information. For ICC Holdings, its latest earnings (trailing twelve month) is US$1.49M, which, against last year’s level, has dropped by a substantial -32.83%. Since these figures are relatively nearsighted, I’ve estimated an annualized five-year value for ICCH’s earnings, which stands at US$2.29M This doesn’t look much better, since earnings seem to have consistently been diminishing over time.

Why is this? Let’s examine what’s occurring with margins and if the entire industry is facing the same headwind. Over the past couple of years, revenue growth has failed to keep up which suggests that ICC Holdings’s bottom line has been propelled by unsustainable cost-reductions. Eyeballing growth from a sector-level, the US insurance industry has been growing, albeit, at a unexciting single-digit rate of 6.49% in the past year, and 8.58% over the past half a decade. This shows that any tailwind the industry is enjoying, ICC Holdings has not been able to gain as much as its industry peers.

What does this mean?

ICC Holdings’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story. Typically companies that endure a drawn out period of reduction in earnings are undergoing some sort of reinvestment phase in order to keep up with the latest industry disruption and expansion. You should continue to research ICC Holdings to get a better picture of the stock by looking at:

• 1. Financial Health: Is ICCH’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.

• 2. Valuation: What is ICCH worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether ICCH is currently mispriced by the market.

• 3. 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 September 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.