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 ICICI Lombard General Insurance Company Limited (NSE:ICICIGI) share price is 37% higher than it was a year ago, much better than the market return of around -13% (not including dividends) in the same period. That's a solid performance by our standards! ICICI Lombard General Insurance hasn't been listed for long, so it's still not clear if it is a long term winner.
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).
ICICI Lombard General Insurance was able to grow EPS by 14% in the last twelve months. This EPS growth is significantly lower than the 37% increase in the share price. This indicates that the market is now more optimistic about the stock. The fairly generous P/E ratio of 50.89 also points to this optimism.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that ICICI Lombard General Insurance has improved its bottom line lately, but is it going to grow revenue? Check if analysts think ICICI Lombard General Insurance will grow revenue in the future.
A Different Perspective
ICICI Lombard General Insurance boasts a total shareholder return of 37% for the last year(that includes the dividends). The more recent returns haven't been as impressive as the longer term returns, coming in at just 0.4%. Having said that, we doubt shareholders would be concerned. It seems the market is simply waiting on more information, because if the business delivers so will the share price (eventually). 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.
Of course ICICI Lombard General Insurance 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 IN 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.