The ICICI Lombard General Insurance (NSE:ICICIGI) Share Price Is Up 82% And Shareholders Are Holding On

By buying an index fund, you can roughly match the market return with ease. But if you buy good businesses at attractive prices, your portfolio returns could exceed the average market return. For example, the ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) share price is up 82% in the last three years, clearly besting the market return of around 13% (not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 6.7% in the last year.

See our latest analysis for ICICI Lombard General Insurance

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 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).

ICICI Lombard General Insurance was able to grow its EPS at 19% per year over three years, sending the share price higher. We don't think it is entirely coincidental that the EPS growth is reasonably close to the 22% average annual increase in the share price. This suggests that sentiment and expectations have not changed drastically. Quite to the contrary, the share price has arguably reflected the EPS growth.

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

We know that ICICI Lombard General Insurance has improved its bottom line lately, but is it going to grow revenue? Check if analysts think ICICI Lombard General Insurance will grow revenue in the future.

What About Dividends?

It is important to consider the total shareholder return, as well as the share price return, for any given stock. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, ICICI Lombard General Insurance's TSR for the last 3 years was 84%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

Over the last year ICICI Lombard General Insurance shareholders have received a TSR of 6.7%. Unfortunately this falls short of the market return of around 22%. But the (superior) three-year TSR of 23% per year is some consolation. We prefer focus on longer term returns, as they are usually a more meaningful indication of the underlying business. 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. Consider for instance, the ever-present spectre of investment risk. We've identified 1 warning sign with ICICI Lombard General Insurance , and understanding them should be part of your investment process.

We will like ICICI Lombard General Insurance 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 IN 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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