If you buy and hold a stock for many years, you’d hope to be making a profit. But more than that, you probably want to see it rise more than the market average. Unfortunately for shareholders, while the Everest Re Group, Ltd. (NYSE:RE) share price is up 23% in the last five years, that’s less than the market return. The last year has been disappointing, with the stock price down 20% in that time.
View our latest analysis for Everest Re Group
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it’s a weighing machine. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.
Everest Re Group’s earnings per share are down 5.2% per year, despite strong share price performance over five years.
The strong decline in earnings per share suggests the market isn’t using EPS to judge the company. The falling EPS doesn’t correlate with the climbing share price, so it’s worth taking a look at other metrics.
In contrast revenue growth of 10% per year is probably viewed as evidence that Everest Re Group is growing, a real positive. It’s quite possible that management are prioritizing revenue growth over EPS growth at the moment.
The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).
We like that insiders have been buying shares in the last twelve months. Even so, future earnings will be far more important to whether current shareholders make money. So we recommend checking out this free report showing consensus forecasts
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Everest Re Group the TSR over the last 5 years was 39%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
Investors in Everest Re Group had a tough year, with a total loss of 18% (including dividends), against a market gain of about 24%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. If the fundamental data continues to indicate long term sustainable growth, the current sell-off could be an opportunity worth considering. It’s always interesting to track share price performance over the longer term. But to understand Everest Re Group better, we need to consider many other factors. For example, we’ve discovered 1 warning sign for Everest Re Group that you should be aware of before investing here.
Everest Re Group is not the only stock insiders are buying. So take a peek at this free list of growing companies with insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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