Clal Insurance Enterprises Holdings (TLV:CLIS) increases 5.9% this week, taking three-year gains to 21%

By buying an index fund, you can roughly match the market return with ease. But many of us dare to dream of bigger returns, and build a portfolio ourselves. Just take a look at Clal Insurance Enterprises Holdings Ltd. (TLV:CLIS), which is up 21%, over three years, soundly beating the market return of 12% (not including dividends).

Since the stock has added ₪240m to its market cap in the past week alone, let's see if underlying performance has been driving long-term returns.

Check out our latest analysis for Clal Insurance Enterprises Holdings

There is no denying that markets are sometimes efficient, but prices do not always reflect 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.

Clal Insurance Enterprises Holdings became profitable within the last three years. That would generally be considered a positive, so we'd expect the share price to be up.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

It might be well worthwhile taking a look at our free report on Clal Insurance Enterprises Holdings' earnings, revenue and cash flow.

A Different Perspective

While it's never nice to take a loss, Clal Insurance Enterprises Holdings shareholders can take comfort that their trailing twelve month loss of 4.1% wasn't as bad as the market loss of around 10%. Given the total loss of 2% per year over five years, it seems returns have deteriorated in the last twelve months. While some investors do well specializing in buying companies that are struggling (but nonetheless undervalued), don't forget that Buffett said that 'turnarounds seldom turn'. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. For instance, we've identified 3 warning signs for Clal Insurance Enterprises Holdings that you should be aware of.

We will like Clal Insurance Enterprises Holdings better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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