Does Taiwan Fire & Marine Insurance's (TPE:2832) Share Price Gain of 17% Match Its Business Performance?

On average, over time, stock markets tend to rise higher. This makes investing attractive. But if when you choose to buy stocks, some of them will be below average performers. For example, the Taiwan Fire & Marine Insurance Co., Ltd. (TPE:2832), share price is up over the last year, but its gain of 17% trails the market return. The longer term returns have not been as good, with the stock price only 6.1% higher than it was three years ago.

Check out our latest analysis for Taiwan Fire & Marine Insurance

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.

Taiwan Fire & Marine Insurance was able to grow EPS by 12% in the last twelve months. This EPS growth is significantly lower than the 17% increase in the share price. So it's fair to assume the market has a higher opinion of the business than it a year ago.

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 Taiwan Fire & Marine Insurance's earnings, revenue and cash flow.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. We note that for Taiwan Fire & Marine Insurance the TSR over the last year was 23%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Taiwan Fire & Marine Insurance provided a TSR of 23% over the last twelve months. But that return falls short of the market. On the bright side, that's still a gain, and it's actually better than the average return of 6% over half a decade This suggests the company might be improving over time. 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. To that end, you should learn about the 2 warning signs we've spotted with Taiwan Fire & Marine Insurance (including 1 which makes us a bit uncomfortable) .

But note: Taiwan Fire & Marine Insurance may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).

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