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Did You Manage To Avoid CNP Assurances' (EPA:CNP) Painful 54% Share Price Drop?

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Taking the occasional loss comes part and parcel with investing on the stock market. And there's no doubt that CNP Assurances SA (EPA:CNP) stock has had a really bad year. To wit the share price is down 54% in that time. We note that it has not been easy for shareholders over three years, either; the share price is down 54% in that time. Shareholders have had an even rougher run lately, with the share price down 41% in the last 90 days. However, one could argue that the price has been influenced by the general market, which is down 22% in the same timeframe.

See our latest analysis for CNP Assurances

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. 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).

During the unfortunate twelve months during which the CNP Assurances share price fell, it actually saw its earnings per share (EPS) improve by 1.1%. It's quite possible that growth expectations may have been unreasonable in the past.

By glancing at these numbers, we'd posit that the the market had expectations of much higher growth, last year. But other metrics might shed some light on why the share price is down.

CNP Assurances's dividend seems healthy to us, so we doubt that the yield is a concern for the market. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Unless, of course, the market was expecting a revenue uptick.

You can see how earnings and revenue have changed over time in the image below (click on the chart to see the exact values).

ENXTPA:CNP Income Statement May 25th 2020
ENXTPA:CNP Income Statement May 25th 2020

It's probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free report showing analyst forecasts should help you form a view on CNP Assurances

What about the Total Shareholder Return (TSR)?

We'd be remiss not to mention the difference between CNP Assurances's total shareholder return (TSR) and its share price return. Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Dividends have been really beneficial for CNP Assurances shareholders, and that cash payout explains why its total shareholder loss of 54%, over the last year, isn't as bad as the share price return.

A Different Perspective

We regret to report that CNP Assurances shareholders are down 54% for the year (even including dividends) . Unfortunately, that's worse than the broader market decline of 12%. 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. Unfortunately, last year's performance may indicate unresolved challenges, given that it was worse than the annualised loss of 6.4% 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. 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 be aware of the 2 warning signs we've spotted with CNP Assurances .

But note: CNP Assurances 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 FR 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. Thank you for reading.