In This Article:
For many, the main point of investing is to generate higher returns than the overall market. But the main game is to find enough winners to more than offset the losers So we wouldn't blame long term AXIS Capital Holdings Limited (NYSE:AXS) shareholders for doubting their decision to hold, with the stock down 14% over a half decade. On top of that, the share price is down 6.2% in the last week. But this could be related to the soft market, which is down about 5.6% in the same period.
With the stock having lost 6.2% in the past week, it's worth taking a look at business performance and seeing if there's any red flags.
See our latest analysis for AXIS Capital Holdings
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 unfortunate half decade during which the share price slipped, AXIS Capital Holdings actually saw its earnings per share (EPS) improve by 8.2% per year. Given the share price reaction, one might suspect that EPS is not a good guide to the business performance during the period (perhaps due to a one-off loss or gain). Alternatively, growth expectations may have been unreasonable in the past.
It's strange to see such muted share price performance despite sustained growth. Perhaps a clue lies in other metrics.
Revenue is actually up 3.4% over the time period. A more detailed examination of the revenue and earnings may or may not explain why the share price languishes; there could be an opportunity.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
It is of course excellent to see how AXIS Capital Holdings has grown profits over the years, but the future is more important for shareholders. This free interactive report on AXIS Capital Holdings' balance sheet strength is a great place to start, if you want to investigate the stock further.
What About Dividends?
It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, AXIS Capital Holdings' TSR for the last 5 years was 1.0%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!