After reading Genworth Mortgage Insurance Australia Limited's (ASX:GMA) most recent earnings announcement (30 September 2019), I found it useful to look back at how the company has performed in the past and compare this against the latest numbers. As a long-term investor I tend to focus on earnings trend, rather than a single number at one point in time. Also, comparing it against an industry benchmark to understand whether it outperformed, or is simply riding an industry wave, is a crucial aspect. Below is a brief commentary on my key takeaways.

View our latest analysis for Genworth Mortgage Insurance Australia

Could GMA beat the long-term trend and outperform its industry?

GMA's trailing twelve-month earnings (from 30 September 2019) of AU$127m has jumped 42% compared to the previous year.

Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of -23%, indicating the rate at which GMA is growing has accelerated. What's enabled this growth? Let's see whether it is only attributable to an industry uplift, or if Genworth Mortgage Insurance Australia has seen some company-specific growth.

In terms of returns from investment, Genworth Mortgage Insurance Australia has fallen short of achieving a 20% return on equity (ROE), recording 7.9% instead. However, its return on assets (ROA) of 3.9% exceeds the AU Mortgage industry of 1.0%, indicating Genworth Mortgage Insurance Australia has used its assets more efficiently. Though, its return on capital (ROC), which also accounts for Genworth Mortgage Insurance Australia’s debt level, has declined over the past 3 years from 15% to 9.7%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 5.7% to 11% over the past 5 years.

What does this mean?

Though Genworth Mortgage Insurance Australia's past data is helpful, it is only one aspect of my investment thesis. Recent positive growth isn't always indicative of a continued optimistic outlook. There may be variables that are affecting the industry as a whole, thus the high industry growth rate over the same time frame. I recommend you continue to research Genworth Mortgage Insurance Australia to get a better picture of the stock by looking at:

1. Future Outlook: What are well-informed industry analysts predicting for GMA’s future growth? Take a look at our free research report of analyst consensus for GMA’s outlook.

2. Financial Health: Are GMA’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.

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.