Would Shareholders Who Purchased Powszechny Zaklad Ubezpieczen's (WSE:PZU) Stock Three Years Be Happy With The Share price Today?

Powszechny Zaklad Ubezpieczen SA (WSE:PZU) shareholders should be happy to see the share price up 19% in the last month. But that doesn't change the fact that the returns over the last three years have been less than pleasing. After all, the share price is down 42% in the last three years, significantly under-performing the market.

Check out our latest analysis for Powszechny Zaklad Ubezpieczen

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).

Powszechny Zaklad Ubezpieczen saw its EPS decline at a compound rate of 8.0% per year, over the last three years. This reduction in EPS is slower than the 17% annual reduction in the share price. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. This increased caution is also evident in the rather low P/E ratio, which is sitting at 10.37.

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

Dive deeper into Powszechny Zaklad Ubezpieczen's key metrics by checking this interactive graph of Powszechny Zaklad Ubezpieczen's earnings, revenue and cash flow.

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between Powszechny Zaklad Ubezpieczen's total shareholder return (TSR) and its share price return. 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. Its history of dividend payouts mean that Powszechny Zaklad Ubezpieczen's TSR, which was a 34% drop over the last 3 years, was not as bad as the share price return.

A Different Perspective

While the broader market lost about 3.5% in the twelve months, Powszechny Zaklad Ubezpieczen shareholders did even worse, losing 29%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 0.6% over the last half decade. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Powszechny Zaklad Ubezpieczen better, we need to consider many other factors. For instance, we've identified 2 warning signs for Powszechny Zaklad Ubezpieczen that you should be aware of.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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

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