While shareholders of Hyundai Marine & Fire Insurance (KRX:001450) are in the red over the last three years, underlying earnings have actually grown

For many investors, the main point of stock picking is to generate higher returns than the overall market. But its virtually certain that sometimes you will buy stocks that fall short of the market average returns. We regret to report that long term Hyundai Marine & Fire Insurance Co., Ltd. (KRX:001450) shareholders have had that experience, with the share price dropping 31% in three years, versus a market decline of about 1.4%. The more recent news is of little comfort, with the share price down 29% in a year. On the other hand the share price has bounced 6.2% over the last week. The buoyant market could have helped drive the share price pop, since stocks are up 2.8% in the same period.

While the stock has risen 6.2% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

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While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.

During the unfortunate three years of share price decline, Hyundai Marine & Fire Insurance actually saw its earnings per share (EPS) improve by 27% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Or else the company was over-hyped in the past, and so its growth has disappointed.

Since the change in EPS doesn't seem to correlate with the change in share price, it's worth taking a look at other metrics.

The company has kept revenue pretty healthy over the last three years, so we doubt that explains the falling share price. There doesn't seem to be any clear correlation between the fundamental business metrics and the share price. That could mean that the stock was previously overrated, or it could spell opportunity now.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

Hyundai Marine & Fire 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 Hyundai Marine & Fire Insurance in this interactive graph of future profit estimates.

What About The Total Shareholder Return (TSR)?

Investors should note that there's a difference between Hyundai Marine & Fire Insurance's total shareholder return (TSR) and its share price change, which we've covered above. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Hyundai Marine & Fire Insurance's TSR of was a loss of 21% for the 3 years. That wasn't as bad as its share price return, because it has paid dividends.

A Different Perspective

We regret to report that Hyundai Marine & Fire Insurance shareholders are down 29% for the year. Unfortunately, that's worse than the broader market decline of 5.2%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. Longer term investors wouldn't be so upset, since they would have made 2%, each year, over five years. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Hyundai Marine & Fire Insurance better, we need to consider many other factors. Take risks, for example - Hyundai Marine & Fire Insurance has 1 warning sign we think you should be aware of.

Of course Hyundai Marine & Fire Insurance may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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