China Reinsurance (Group)'s(HKG:1508) Share Price Is Down 67% Over The Past Five Years.

Generally speaking long term investing is the way to go. But no-one is immune from buying too high. To wit, the China Reinsurance (Group) Corporation (HKG:1508) share price managed to fall 67% over five long years. We certainly feel for shareholders who bought near the top. And it's not just long term holders hurting, because the stock is down 35% in the last year. On the other hand, we note it's up 8.1% in about a month. However, this may be a matter of broader market optimism, since stocks are up 8.1% in the same time.

Check out our latest analysis for China Reinsurance (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. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

Looking back five years, both China Reinsurance (Group)'s share price and EPS declined; the latter at a rate of 12% per year. This reduction in EPS is less than the 20% annual reduction in the share price. This implies that the market is more cautious about the business these days. The low P/E ratio of 5.55 further reflects this reticence.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

It might be well worthwhile taking a look at our free report on China Reinsurance (Group)'s earnings, revenue and cash flow.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, China Reinsurance (Group)'s TSR for the last 5 years was -61%, which exceeds the share price return mentioned earlier. This is largely a result of its dividend payments!

A Different Perspective

Investors in China Reinsurance (Group) had a tough year, with a total loss of 32% (including dividends), against a market gain of about 16%. Even the share prices of good stocks drop sometimes, but we want to see improvements in the fundamental metrics of a business, before getting too interested. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 10% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand China Reinsurance (Group) better, we need to consider many other factors. Like risks, for instance. Every company has them, and we've spotted 2 warning signs for China Reinsurance (Group) (of which 1 can't be ignored!) you should know about.

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 HK 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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