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The simplest way to invest in stocks is to buy exchange traded funds. But investors can boost returns by picking market-beating companies to own shares in. To wit, the ICC Holdings, Inc. (NASDAQ:ICCH) share price is 39% higher than it was a year ago, much better than the market return of around 30% (not including dividends) in the same period. That's a solid performance by our standards! Having said that, the longer term returns aren't so impressive, with stock gaining just 15% in three years.
So let's assess the underlying fundamentals over the last 1 year and see if they've moved in lock-step with shareholder returns.
In his essay The Superinvestors of Graham-and-Doddsville Warren Buffett described how share prices do not always rationally reflect the value of a business. One flawed but reasonable way to assess how sentiment around a company has changed is to compare the earnings per share (EPS) with the share price.
ICC Holdings was able to grow EPS by 130% in the last twelve months. This EPS growth is significantly higher than the 39% increase in the share price. Therefore, it seems the market isn't as excited about ICC Holdings as it was before. This could be an opportunity. This cautious sentiment is reflected in its (fairly low) P/E ratio of 8.02.
The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).
Dive deeper into ICC Holdings' key metrics by checking this interactive graph of ICC Holdings's earnings, revenue and cash flow.
A Different Perspective
Pleasingly, ICC Holdings' total shareholder return last year was 39%. So this year's TSR was actually better than the three-year TSR (annualized) of 5%. These improved returns may hint at some real business momentum, implying that now could be a great time to delve deeper. 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. For example, we've discovered 2 warning signs for ICC Holdings that you should be aware of before investing here.
If you are like me, then you will not want to miss this free list of growing companies that insiders are buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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.
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