In this article, I will take a look at Prime Financial Group Limited's (ASX:PFG) most recent earnings update (31 December 2019) and compare these latest figures against its performance over the past few years, along with how the rest of PFG's industry performed. As a long-term investor, I find it useful to analyze the company's trend over time in order to estimate whether or not the company is able to meet its goals, and eventually grow sustainably over time.

See our latest analysis for Prime Financial Group

How PFG fared against its long-term earnings performance and its industry

PFG recently turned a profit of AU$1.2m (most recent trailing twelve-months) compared to its average loss of -AU$1.4m over the past five years.

In terms of returns from investment, Prime Financial Group has fallen short of achieving a 20% return on equity (ROE), recording 4.8% instead. Furthermore, its return on assets (ROA) of 3.1% is below the AU Capital Markets industry of 7.1%, indicating Prime Financial Group's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Prime Financial Group’s debt level, has declined over the past 3 years from 12% to 5.3%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 13% to 25% over the past 5 years.

What does this mean?

While past data is useful, it doesn’t tell the whole story. While Prime Financial Group has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Prime Financial Group to get a more holistic view of the stock by looking at:

1. Financial Health: Are PFG’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 PFG 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 PFG 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 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.

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