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Investors Who Bought Assurant (NYSE:AIZ) Shares Five Years Ago Are Now Up 54%

Simply Wall St

The main point of investing for the long term is to make money. Furthermore, you'd generally like to see the share price rise faster than the market But Assurant, Inc. (NYSE:AIZ) has fallen short of that second goal, with a share price rise of 54% over five years, which is below the market return. The last year hasn't been great either, with the stock up just 2.4%.

See our latest analysis for Assurant

There is no denying that markets are sometimes efficient, but prices do not always reflect 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 five years of share price growth, Assurant achieved compound earnings per share (EPS) growth of 1.3% per year. This EPS growth is lower than the 9.0% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. That's not necessarily surprising considering the five-year track record of earnings growth.

The image below shows how EPS has tracked over time (if you click on the image you can see greater detail).

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

We know that Assurant has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.

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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Assurant the TSR over the last 5 years was 72%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

Assurant shareholders gained a total return of 4.5% during the year. But that was short of the market average. On the bright side, the longer term returns (running at about 11% a year, over half a decade) look better. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. It's always interesting to track share price performance over the longer term. But to understand Assurant better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Assurant , and understanding them should be part of your investment process.

Of course Assurant may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

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@simplywallst.com.