If you love investing in stocks you're bound to buy some losers. Long term Ping An Insurance (Group) Company of China, Ltd. (HKG:2318) shareholders know that all too well, since the share price is down considerably over three years. So they might be feeling emotional about the 57% share price collapse, in that time. And over the last year the share price fell 29%, so we doubt many shareholders are delighted. The falls have accelerated recently, with the share price down 27% in the last three months. But this could be related to the weak market, which is down 17% in the same period.

Given the past week has been tough on shareholders, let's investigate the fundamentals and see what we can learn.

See our latest analysis for Ping An Insurance (Group) Company of China

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Ping An Insurance (Group) Company of China saw its EPS decline at a compound rate of 11% per year, over the last three years. The share price decline of 24% is actually steeper than the EPS slippage. So it's likely that the EPS decline has disappointed the market, leaving investors hesitant to buy. This increased caution is also evident in the rather low P/E ratio, which is sitting at 6.21.

The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).

It's good to see that there was some significant insider buying in the last three months. That's a positive. On the other hand, we think the revenue and earnings trends are much more meaningful measures of the business. Before buying or selling a stock, we always recommend a close examination of historic growth trends, available here..

What About Dividends?

When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Ping An Insurance (Group) Company of China the TSR over the last 3 years was -51%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

The total return of 24% received by Ping An Insurance (Group) Company of China shareholders over the last year isn't far from the market return of -23%. So last year was actually even worse than the last five years, which cost shareholders 5% per year. It will probably take a substantial improvement in the fundamental performance for the company to reverse this trend. Investors who like to make money usually check up on insider purchases, such as the price paid, and total amount bought. You can find out about the insider purchases of Ping An Insurance (Group) Company of China by clicking this link.

If you like to buy stocks alongside management, then you might just love this free list of companies. (Hint: insiders have been buying them).

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

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.