If you buy a stock and hold it for years, you expect it to make a profit. But more than that, you want it to rise above the market average.but CNO Financial Group Co., Ltd. (NYSE:CNO) missed the second goal, with its stock up 65% in five years, which is below the market return. However, recent buyers should be happy with the 24% increase over last year.
The last week has proven favorable for CNO Financial Group investors, so let's take a look at whether the fundamentals have driven the company's five-year performance.
Check out our latest analysis for CNO Financial Group.
in his essay Graham & Doddsville SuperInvestors Warren Buffett has said that stock prices do not always rationally reflect the value of a company. One way he looks at how market sentiment has changed over time is to look at the interaction between a company's stock price and his earnings per share (EPS).
During five years of stock price growth, CNO Financial Group went from a loss to a profit. This is generally considered a true positive, so investors may expect the stock price to rise. The company was in the red five years ago, but not three years ago, so it's worth checking the last three years' earnings as well. We can see that CNO Financial Group's stock price has increased by 10% over the past three years. Meanwhile, EPS increased by 6.2% annually. This EPS growth for him is higher than his average annual stock price increase of 3% over the same three-year period. As a result, the market appears to have tempered growth expectations somewhat. This cautious sentiment is reflected in the (rather low) P/E of 10.80.
You can see below how EPS has changed over time (unveil the exact values by clicking on the image).
We like that insiders have been buying shares in the last twelve months. Even so, future profits will be far more important than whether current shareholders make money. Before buying or selling a stock, it's always a good idea to take a closer look at past growth trends. You can get it here.
What will happen to the dividend?
It's important to consider not only the share price return, but also the total shareholder return for a particular 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 increases and spin-offs. So for companies that pay a generous dividend, the TSR is often much higher than the share price return. For CNO Financial Group, the TSR for the last 5 years is 86%. This exceeds the stock return mentioned earlier. Therefore, the dividend paid by the company is total Shareholder returns.
different perspective
CNO Financial Group's TSR for the year was 27%, roughly in line with the market average. Most people would be happy if they made a profit, and it helps that the annual return is actually better than his five-year average return (13%). Even if the stock price slows, management's foresight could lead to future growth. It's always interesting to track stock performance over the long term. But to understand CNO Financial Group better, you need to consider many other factors. Still, take note of what CNO Financial Group shows. 2 warning signs in investment analysis one of which could be serious…
If you want to buy stocks with management, you might like this free List of companies. (Hint: Insiders are buying them).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on American 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 using only unbiased methodologies, and the articles are not intended as financial advice. This is not a recommendation to buy or sell any stock, and does not take into account your objectives or financial situation. We aim to provide long-term, focused analysis based on fundamental data. Note that our analysis may not factor in the latest announcements or qualitative material from price-sensitive companies. Simply Wall St has no position in any stocks mentioned.
