Yahoo Finance Has Power Corporation of Canada (TSE:POW) Improved Earnings In Recent Times?
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In this commentary, I will examine Power Corporation of Canada's (TSE:POW) latest earnings update (31 December 2018) and compare these figures against its performance over the past couple of years, as well as how the rest of the insurance industry performed. As an investor, I find it beneficial to assess POW’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time.
See our latest analysis for Power of Canada
Did POW's recent earnings growth beat the long-term trend and the industry?
POW's trailing twelve-month earnings (from 31 December 2018) of CA$1.3b has increased by 0.08% 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 3.0%, indicating the rate at which POW is growing has slowed down. What could be happening here? Well, let's look at what's occurring with margins and if the whole industry is experiencing the hit as well.
In terms of returns from investment, Power of Canada has fallen short of achieving a 20% return on equity (ROE), recording 9.1% instead. Furthermore, its return on assets (ROA) of 0.4% is below the CA Insurance industry of 1.0%, indicating Power of Canada's are utilized less efficiently. And finally, its return on capital (ROC), which also accounts for Power of Canada’s debt level, has declined over the past 3 years from 1.2% to 1.0%.
What does this mean?
Though Power of Canada's past data is helpful, it is only one aspect of my investment thesis. Companies that have performed well in the past, such as Power of Canada gives investors conviction. However, the next step would be to assess whether the future looks as optimistic. I recommend you continue to research Power of Canada to get a better picture of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for POW’s future growth? Take a look at our free research report of analyst consensus for POW’s outlook.
Financial Health: Are POW’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 2018. This may not be consistent with full year annual report figures.
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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. Thank you for reading.
