Those who invested in Gjensidige Forsikring (OB: GJF) three years ago are up 67%

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By purchasing an index fund, investors can get closer to the average market return. But if you choose the right individual stocks, you could earn more than that. For example, Gjensidige Forsikring ASA Shareholders (OB: GJF) saw the share price increase by 43% over three years, well above the market yield (5.0%, excluding dividends). On the other hand, returns have not been so good recently, with shareholders up just 15% including dividends.

Now, it’s worth looking at the fundamentals of the business as well, as this will help us determine whether the long-term return to shareholders matches the performance of the underlying business.

Check out our latest review for Gjensidige Forsikring

In his essay Graham-and-Doddsville super-investors Warren Buffett described how stock prices don’t always rationally reflect a company’s value. An imperfect but reasonable way to gauge how sentiment is changing around a company is to compare earnings per share (EPS) with the stock price.

Gjensidige Forsikring was able to increase his EPS by 26% per year over three years, driving up the share price. The average annual share price increase of 13% is actually lower than EPS growth. We could therefore reasonably conclude that the market has cooled on the title.

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

OB: Growth in earnings per share of GJF on September 15, 2021

We love that insiders have bought stocks in the past twelve months. Having said that, most people consider earnings and revenue growth trends to be a more meaningful guide for the business. Dive deeper into earnings by checking out this interactive Gjensidige Forsikring Earnings, Income & Cash Flow graph.

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 incorporates the value of any discounted demerger or capital increase, as well as any dividend, based on the assumption that dividends are reinvested. It’s fair to say that the TSR gives a more complete picture of dividend paying stocks. In the case of Gjensidige Forsikring, he has a TSR of 67% for the past 3 years. This exceeds the return on its share price that we mentioned earlier. The dividends paid by the company thus boosted the total shareholder return.

A different perspective

The shareholders of Gjensidige Forsikring achieved a total return of 15% during the year. Unfortunately, this is below market performance. The silver lining is that the gain was actually better than the average annual return of 12% per year over five years. This could indicate that the company is attracting new investors, while pursuing its strategy. It is always interesting to follow the evolution of stock prices over the long term. But in order to better understand Gjensidige Forsikring, there are many other factors that we need to take into account. However, be aware that Gjensidige Forsikring shows 2 warning signs in our investment analysis , and 1 of them should not be ignored …

Gjensidige Forsikring isn’t the only stock that insiders are buying. For those who like to find winning investments this free list of growing companies with recent insider buys, might be just the ticket.

Please note that the market returns quoted in this article reflect the average market weighted returns of stocks that are currently trading on NO stock exchange.

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This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts using only unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents. Simply Wall St has no position in the mentioned stocks.
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