If you want to compound wealth in the stock market, you can do so by buying an index fund. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Kinsale Capital Group, Inc. (NASDAQ:KNSL) share price is 31% higher than it was a year ago, much better than the market return of around 3.3% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! Kinsale Capital Group hasn’t been listed for long, so it’s still not clear if it is a long term winner.
To quote Buffett, ‘Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace…’ 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 last year Kinsale Capital Group grew its earnings per share (EPS) by 35%. This EPS growth is reasonably close to the 31% increase in the share price. That suggests that the market sentiment around the company hasn’t changed much over that time. We don’t think its coincidental that the share price is growing at a similar rate to the earnings per share.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We’re pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on Kinsale Capital Group’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.
A Different Perspective
Kinsale Capital Group boasts a total shareholder return of 32% for the last year(that includes the dividends). A substantial portion of that gain has come in the last three months, with the stock up 12% in that time. This suggests the company is continuing to win over new investors. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.