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One simple way to benefit from the stock market is to buy an index fund. But if you pick the right individual stocks, you could make more than that. For example, Münchener Rückversicherungs-Gesellschaft Aktiengesellschaft in München (ETR:MUV2) shareholders have seen the share price rise 93% over three years, well in excess of the market decline (6.9%, not including dividends). However, more recent returns haven't been as impressive as that, with the stock returning just 36% in the last year, including dividends.
With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies.
View our latest analysis for Münchener Rückversicherungs-Gesellschaft in München
To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' 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).
During three years of share price growth, Münchener Rückversicherungs-Gesellschaft in München achieved compound earnings per share growth of 39% per year. This EPS growth is higher than the 25% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
It is of course excellent to see how Münchener Rückversicherungs-Gesellschaft in München has grown profits over the years, but the future is more important for shareholders. This free interactive report on Münchener Rückversicherungs-Gesellschaft in München's balance sheet strength is a great place to start, if you want to investigate the stock further.
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. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. We note that for Münchener Rückversicherungs-Gesellschaft in München the TSR over the last 3 years was 117%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return.
A Different Perspective
We're pleased to report that Münchener Rückversicherungs-Gesellschaft in München shareholders have received a total shareholder return of 36% over one year. Of course, that includes the dividend. That's better than the annualised return of 18% over half a decade, implying that the company is doing better recently. Given the share price momentum remains strong, it might be worth taking a closer look at the stock, lest you miss an opportunity. 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. For example, we've discovered 1 warning sign for Münchener Rückversicherungs-Gesellschaft in München that you should be aware of before investing here.