The last five years for investors in Greenlight Capital Re (NASDAQ:GLRE) have not been profitable
Statistically speaking, long-term investing is a profitable business. But that doesn’t mean long-term investors can avoid big losses. For example, after five long years, the Greenlight Capital Re, Ltd. (NASDAQ:GLRE) stock price is 65% lower. It’s an unpleasant experience for long-term holders.
With that in mind, it’s worth looking at whether the company’s underlying fundamentals have been driving long-term performance, or if there are any gaps.
Although the efficient markets hypothesis continues to be taught by some, it has been proven that markets are overly reactive dynamic systems and that investors are not always rational. One way to look at how market sentiment has changed over time is to look at the interaction between a company’s stock price and its earnings per share (EPS).
In five years of share price growth, Greenlight Capital Re has gone from loss to profitability. This would generally be seen as a positive, so we’re surprised to see the stock price down. Other metrics might give us a better idea of how its value is changing over time.
Unlike the stock price, revenue actually grew 1.2% per year over the five-year period. A closer look at revenue and earnings may or may not explain why the stock price is languishing; there might be an opportunity.
The company’s revenues and profits (over time) are shown in the image below (click to see exact figures).
You can see how its balance sheet has strengthened (or weakened) over time in this free interactive chart.
A different perspective
It is good to see that Greenlight Capital Re has rewarded shareholders with a total shareholder return of 4.9% over the past twelve months. This certainly exceeds the loss of about 11% per year over the last half-decade. We generally value long-term performance more than short-term performance, but the recent improvement could point to a (positive) inflection point within the company. I find it very interesting to look at stock price over the long term as a proxy for company performance. But to really get insight, we also need to consider other information. For example, we have identified 2 warning signs for Greenlight Capital Re of which you should be aware.
Sure Greenlight Capital Re may not be the best stock to buy. So you might want to see this free collection of growth values.
Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.
Feedback on this article? Concerned about content? Get in touch with us directly. You can also email the editorial team (at) Simplywallst.com.
This Simply Wall St article is general in nature. We provide commentary based on historical data and analyst forecasts only using unbiased methodology and our articles are not intended to be financial advice. It is not a recommendation to buy or sell stocks and does not take into account your objectives or financial situation. Our goal is to bring you targeted long-term analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price-sensitive companies or qualitative materials. Simply Wall St has no position in the stocks mentioned.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.