Introducing National Western Life Group (NASDAQ:NWLI), The Stock That Dropped 13% In The Last Three Years

In order to justify the effort of selecting individual stocks, it's worth striving to beat the returns from a market index fund. But the risk of stock picking is that you will likely buy under-performing companies. We regret to report that long term National Western Life Group, Inc. (NASDAQ:NWLI) shareholders have had that experience, with the share price dropping 13% in three years, versus a market return of about 50%.

Check out our latest analysis for National Western Life Group

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the unfortunate three years of share price decline, National Western Life Group actually saw its earnings per share (EPS) improve by 1.9% per year. This is quite a puzzle, and suggests there might be something temporarily buoying the share price. Alternatively, growth expectations may have been unreasonable in the past.

Given that EPS is up and the share price is down, it seems clear the market is less excited about the business than it was. Of course, this could spell opportunity because if the EPS growth continues long term, it seems very likely the share price will rise too.

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

Dive deeper into National Western Life Group's key metrics by checking this interactive graph of National Western Life Group's earnings, revenue and cash flow.

A Different Perspective

While the broader market gained around 22% in the last year, National Western Life Group shareholders lost 11% (even including dividends) . However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 2.0% per year over half a decade. 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. Is National Western Life Group cheap compared to other companies? These 3 valuation measures might help you decide.

If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.