Earnings are growing at Citizens (NYSE:CIA) but shareholders still don't like its prospects
Generally speaking long term investing is the way to go. But that doesn't mean long term investors can avoid big losses. For example the Citizens, Inc. (NYSE:CIA) share price dropped 56% over five years. That is extremely sub-optimal, to say the least. And some of the more recent buyers are probably worried, too, with the stock falling 47% in the last year. Shareholders have had an even rougher run lately, with the share price down 36% in the last 90 days.
Since Citizens has shed US$31m from its value in the past 7 days, let's see if the longer term decline has been driven by the business' economics.
See our latest analysis for Citizens
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
During five years of share price growth, Citizens moved from a loss to profitability. That would generally be considered a positive, so we are surprised to see the share price is down. Other metrics might give us a better handle on how its value is changing over time.
The revenue fall of 0.6% per year for five years is neither good nor terrible. But if the market expected durable top line growth, then that could explain the share price weakness.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
If you are thinking of buying or selling Citizens stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
While the broader market lost about 5.1% in the twelve months, Citizens shareholders did even worse, losing 47%. 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. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 9% per year over five years. Generally speaking long term share price weakness can be a bad sign, though contrarian investors might want to research the stock in hope of a turnaround. 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. For example, we've discovered 2 warning signs for Citizens that you should be aware of before investing here.
We will like Citizens better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US 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.
