What Type Of Returns Would Wiz Soluções e Corretagem de Seguros'(BVMF:WIZS3) Shareholders Have Earned If They Purchased Their SharesThree Years Ago?

While not a mind-blowing move, it is good to see that the Wiz Soluções e Corretagem de Seguros S.A. (BVMF:WIZS3) share price has gained 26% in the last three months. But that doesn't help the fact that the three year return is less impressive. In fact, the share price is down 49% in the last three years, falling well short of the market return.

View our latest analysis for Wiz Soluções e Corretagem de Seguros

In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Although the share price is down over three years, Wiz Soluções e Corretagem de Seguros actually managed to grow EPS by 9.8% per year in that time. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

Given the healthiness of the dividend payments, we doubt that they've concerned the market. We like that Wiz Soluções e Corretagem de Seguros has actually grown its revenue over the last three years. If the company can keep growing revenue, there may be an opportunity for investors. You might have to dig deeper to understand the recent share price weakness.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

You can see how its balance sheet has strengthened (or weakened) over time in this free interactive graphic.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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 raisings and spin-offs. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Wiz Soluções e Corretagem de Seguros' TSR for the last 3 years was -32%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Wiz Soluções e Corretagem de Seguros shareholders are down 2.2% for the year (even including dividends), but the market itself is up 5.3%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Longer term investors wouldn't be so upset, since they would have made 1.8%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Wiz Soluções e Corretagem de Seguros better, we need to consider many other factors. For instance, we've identified 3 warning signs for Wiz Soluções e Corretagem de Seguros (1 makes us a bit uncomfortable) that you should be aware of.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on BR exchanges.

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