Investors in Samsung Life Insurance (KRX:032830) have seen respectable returns of 65% over the past year

The simplest way to invest in stocks is to buy exchange traded funds. But one can do better than that by picking better than average stocks (as part of a diversified portfolio). To wit, the Samsung Life Insurance Co., Ltd. (KRX:032830) share price is 56% 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! The longer term returns have not been as good, with the stock price only 27% higher than it was three years ago.

Now it’s worth having a look at the company’s fundamentals too, because that will help us determine if the long term shareholder return has matched the performance of the underlying business.

See our latest analysis for Samsung Life Insurance

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just 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.

During the last year Samsung Life Insurance grew its earnings per share (EPS) by 116%. This EPS growth is significantly higher than the 56% increase in the share price. Therefore, it seems the market isn’t as excited about Samsung Life Insurance as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.01.

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

We know that Samsung Life Insurance has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Samsung Life Insurance stock, you should check out this FREE detailed report on its balance sheet.

What About Dividends?

As well as measuring the share price return, investors should also consider the total shareholder return (TSR). 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. It’s fair to say that the TSR gives a more complete picture for stocks that pay a dividend. We note that for Samsung Life Insurance the TSR over the last 1 year was 65%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!

A Different Perspective

It’s nice to see that Samsung Life Insurance shareholders have received a total shareholder return of 65% over the last year. That’s including the dividend. Since the one-year TSR is better than the five-year TSR (the latter coming in at 7% per year), it would seem that the stock’s performance has improved in recent times. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. I find it very interesting to look at share price over the long term as a proxy for business performance. But to truly gain insight, we need to consider other information, too. Case in point: We’ve spotted 2 warning signs for Samsung Life Insurance you should be aware of.

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 South Korean exchanges.

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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.