By purchasing an index fund, investors can approximate the average return of the market. However, if you buy quality companies at attractive prices, your portfolio's returns can exceed the average market return. for example, Axis Capital Holdings Co., Ltd. (NYSE:AXS) stock is up 22% over the past three years, clearly outperforming the market return of about 14% (not including dividends). On the other hand, recent earnings haven't been very good, with shareholders returning only 20%, including dividends.
So let's assess the underlying fundamentals over the past three years to see if they have kept pace with shareholder returns.
Check out our latest analysis for AXIS Capital Holdings.
While there is no denying that markets are sometimes efficient, prices do not always reflect underlying company performance. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During three years of share price growth, AXIS Capital Holdings went from a loss to a profit. Therefore, the stock price is expected to rise during this period.
You can see below how EPS has changed over time (unveil the exact values by clicking on the image).
Perhaps worth noting is that we saw significant insider buying in the last quarter, which we consider a positive. Having said that, we think earnings and revenue growth trends are even more important factors to consider.It might be well worth taking a look at ours free AXIS Capital Holdings earnings, revenue and cash flow report.
What will happen to the dividend?
It's important to consider not only the share price return, but also the total shareholder return for a particular stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital increases and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return delivered by a stock. Coincidentally, Axis Capital Holdings' TSR over the past three years was 34%, which is higher than the share price return mentioned above. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
AXIS Capital Holdings shareholders received a total return of 20% for the year. Unfortunately, this falls short of market returns. On the bright side, this is still profitable, and is actually better than the average return of 6% over the past five years. Returns can improve along with business fundamentals. If you want to investigate this stock further, the data on insider purchases is an obvious place to start. Click here to see who bought the stock and the price they paid.
Axis Capital Holdings isn't the only stock that insiders are buying.For people who like searching succeed in investing this free This list of growing companies with recent insider purchasing may be just the ticket.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American exchanges.
Have feedback on this article? Curious about its content? contact Please contact us directly. Alternatively, email our editorial team at Simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodologies, and articles are not intended to be financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
