U.S. Markets closed
  • S&P 500

    4,432.99
    -40.76 (-0.91%)
     
  • Dow 30

    34,584.88
    -166.42 (-0.48%)
     
  • Nasdaq

    15,043.97
    -137.93 (-0.91%)
     
  • Russell 2000

    2,236.87
    +3.96 (+0.18%)
     
  • Crude Oil

    71.96
    -0.01 (-0.01%)
     
  • Gold

    1,753.90
    +2.50 (+0.14%)
     
  • Silver

    22.42
    +0.13 (+0.58%)
     
  • EUR/USD

    1.1729
    -0.0043 (-0.3636%)
     
  • 10-Yr Bond

    1.3700
    +0.0390 (+2.93%)
     
  • Vix

    20.81
    +2.12 (+11.34%)
     
  • GBP/USD

    1.3740
    -0.0056 (-0.4067%)
     
  • USD/JPY

    109.9600
    +0.2420 (+0.2206%)
     
  • BTC-USD

    47,541.64
    -573.70 (-1.19%)
     
  • CMC Crypto 200

    1,193.48
    -32.05 (-2.61%)
     
  • FTSE 100

    6,963.64
    -63.84 (-0.91%)
     
  • Nikkei 225

    30,500.05
    +176.75 (+0.58%)
     

If You Had Bought Primerica (NYSE:PRI) Shares Five Years Ago You'd Have Earned 167% Returns

  • Oops!
    Something went wrong.
    Please try again later.
·2 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.

The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But on the bright side, you can make far more than 100% on a really good stock. One great example is Primerica, Inc. (NYSE:PRI) which saw its share price drive 167% higher over five years. In the last week the share price is up 2.0%.

Check out our latest analysis for Primerica

While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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).

Over half a decade, Primerica managed to grow its earnings per share at 22% a year. That makes the EPS growth particularly close to the yearly share price growth of 22%. That suggests that the market sentiment around the company hasn't changed much over that time. In fact, the share price seems to largely reflect the EPS growth.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

earnings-per-share-growth
earnings-per-share-growth

We know that Primerica has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Primerica the TSR over the last 5 years was 182%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Primerica provided a TSR of 35% over the last twelve months. Unfortunately this falls short of the market return. On the bright side, that's still a gain, and it's actually better than the average return of 23% over half a decade This suggests the company might be improving over time. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example - Primerica has 2 warning signs we think you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

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

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.