While shareholders of ZhongAn Online P & C Insurance (HKG:6060) are in the red over the last three years, underlying earnings have actually grown

ZhongAn Online P & C Insurance Co., Ltd. (HKG:6060) shareholders will doubtless be very grateful to see the share price up 34% in the last week. But over the last three years we've seen a quite serious decline. Regrettably, the share price slid 59% in that period. So it is really good to see an improvement. Perhaps the company has turned over a new leaf.

While the last three years has been tough for ZhongAn Online P & C Insurance shareholders, this past week has shown signs of promise. So let's look at the longer term fundamentals and see if they've been the driver of the negative returns.

See our latest analysis for ZhongAn Online P & C Insurance

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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.

ZhongAn Online P & C Insurance became profitable within the last five years. We would usually expect to see the share price rise as a result. 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.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

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

Investors in ZhongAn Online P & C Insurance had a tough year, with a total loss of 43%, against a market gain of about 19%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 5% per year over five years. 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. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - ZhongAn Online P & C Insurance has 3 warning signs (and 2 which are a bit concerning) we think you should know about.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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.