Investors in ZhongAn Online P & C Insurance (HKG:6060) have unfortunately lost 62% over the last three years

Investing in stocks inevitably means buying into some companies that perform poorly. But the last three years have been particularly tough on longer term ZhongAn Online P & C Insurance Co., Ltd. (HKG:6060) shareholders. Sadly for them, the share price is down 62% in that time. And the ride hasn't got any smoother in recent times over the last year, with the price 23% lower in that time. Shareholders have had an even rougher run lately, with the share price down 21% in the last 90 days.

Since shareholders are down over the longer term, lets look at the underlying fundamentals over the that time and see if they've been consistent with returns.

Check out our latest analysis for ZhongAn Online P & C Insurance

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 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.

ZhongAn Online P & C Insurance became profitable within the last five years. That would generally be considered a positive, so we are surprised to see the share price is down. So it's worth looking at other metrics to try to understand the share price move.

We note that, in three years, revenue has actually grown at a 15% annual rate, so that doesn't seem to be a reason to sell shares. It's probably worth investigating ZhongAn Online P & C Insurance further; while we may be missing something on this analysis, there might also be an opportunity.

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

ZhongAn Online P & C Insurance is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. You can see what analysts are predicting for ZhongAn Online P & C Insurance in this interactive graph of future profit estimates.

A Different Perspective

While the broader market gained around 29% in the last year, ZhongAn Online P & C Insurance shareholders lost 23%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 10% over the last half decade. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. It's always interesting to track share price performance over the longer term. But to understand ZhongAn Online P & C Insurance better, we need to consider many other factors. Case in point: We've spotted 2 warning signs for ZhongAn Online P & C Insurance you should be aware of.

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

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.