Those who invested in SBI Life Insurance (NSE:SBILIFE) three years ago are up 84% – Simply Wall St

SBI Life Insurance Company Limited (NSE:SBILIFE) shareholders have seen the share price descend 11% over the month. But don’t let that distract from the very nice return generated over three years. In fact, the company’s share price bested the return of its market index in that time, posting a gain of 83%.

Let’s take a look at the underlying fundamentals over the longer term, and see if they’ve been consistent with shareholders returns.

Check out our latest analysis for SBI Life Insurance

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

Over the last three years, SBI Life Insurance failed to grow earnings per share, which fell 2.1% (annualized).

Companies are not always focussed on EPS growth in the short term, and looking at how the share price has reacted, we don’t think EPS is the most important metric for SBI Life Insurance at the moment. Therefore, it makes sense to look into other metrics.

Languishing at just 0.2%, we doubt the dividend is doing much to prop up the share price. It could be that the revenue growth of 27% per year is viewed as evidence that SBI Life Insurance is growing. If the company is being managed for the long term good, today’s shareholders might be right to hold on.

You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).

NSEI:SBILIFE Earnings and Revenue Growth March 4th 2022

It’s probably worth noting that the CEO is paid less than the median at similar sized companies. But while CEO remuneration is always worth checking, the really important question is whether the company can grow earnings going forward. This free interactive report on SBI Life Insurance’s earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

A Different Perspective

We’re pleased to report that SBI Life Insurance rewarded shareholders with a total shareholder return of 18% over the last year. That’s including the dividend. But the three year TSR of 22% per year is even better. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Take risks, for example – SBI Life Insurance has 1 warning sign we think you should be aware of.

We will like SBI Life Insurance better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.

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