Measuring QBE Insurance Group Limited’s (ASX:QBE) track record of past performance is a valuable exercise for investors. It allows us to understand whether or not the company has met or exceed expectations, which is an insightful signal for future performance. Today I will assess QBE’s recent performance announced on 30 June 2017 and compare these figures to its historical trend and industry movements. Check out our latest analysis for QBE Insurance Group

Did QBE’s recent earnings growth beat the long-term trend and the industry?

For the purpose of this commentary, I like 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 method enables me to examine different stocks on a more comparable basis, using the latest information. For QBE Insurance Group, its most recent trailing-twelve-month earnings is $924.0M, which, in comparison to last year’s level, has jumped by a significant 99.14%. Since these values may be fairly nearsighted, I’ve determined an annualized five-year figure for QBE’s net income, which stands at $630.4M. This suggests that, on average, QBE Insurance Group has been able to steadily raise its bottom line over the last few years as well.

What’s the driver of this growth? Well, let’s take a look at whether it is merely because of an industry uplift, or if QBE Insurance Group has seen some company-specific growth. Though both top-line and bottom-line growth rates in the last few years, were, on average, negative, earnings were more so. While this has led to a margin contraction, it has cushioned QBE Insurance Group’s earnings contraction. Inspecting growth from a sector-level, the Australian insurance industry has been growing, albeit, at a subdued single-digit rate of 5.46% over the prior twelve months, and a substantial 11.56% over the past couple of years. This means that whatever tailwind the industry is enjoying, QBE Insurance Group is able to leverage this to its advantage.

What does this mean?

QBE Insurance Group’s track record can be a valuable insight into its earnings performance, but it certainly 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 QBE Insurance Group to get a better picture of the stock by looking at:

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

2. Financial Health: Is QBE’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.

NB: Figures in this article are calculated using data from the trailing twelve months from 30 June 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.