Investors Bid White Mountains Insurance Group (NYSE:WTM) Up US$217 Million Despite Rising Year-on-Year Losses, Bringing Five-Year CAGR to 9.8%

Stock pickers generally look for stocks that will outperform the market as a whole. And the truth is, you can make big gains if you buy good quality businesses at the right price. For example, the White Mountains Insurance Group, Ltd. (NYSE: WTM) the stock price has risen 59% over the past 5 years, clearly outperforming the market return by around 45% (excluding dividends). On the other hand, the most recent gains have not been so impressive, with shareholders gaining only 33% including dividends.

Given that it’s been a solid week for White Mountains Insurance Group shareholders, let’s take a look at the trend in longer-term fundamentals.

Check opportunities and risks within the American insurance industry.

Given that White Mountains Insurance Group has posted a loss over the past twelve months, we think the market is likely more focused on revenue and revenue growth, at least for now. When a business is not making a profit, you generally expect to see good revenue growth. As you can imagine, rapid revenue growth, when sustained, often results in rapid profit growth.

Over the past half-decade, White Mountains Insurance Group can boast revenue growth at a rate of 24% per annum. That’s way above most nonprofits. While the 10% compound gain per year is a good thing, it’s not unreasonable given the strong revenue growth. If the strong revenue growth continues, we expect the stock price to follow, over time. Of course, you will need to research the company further to determine if this is a worthwhile opportunity.

The image below shows how earnings and income have tracked over time (if you click on the image you can see more details).

NYSE: WTM Earnings and Revenue Growth November 23, 2022

Take a closer look at the financial health of White Mountains Insurance Group with this free report on its balance sheet.

A different perspective

It is good to see that shareholders of White Mountains Insurance Group have received a total shareholder return of 33% over the past year. Of course, this includes the dividend. As the one-year TSR is better than the five-year TSR (the latter standing at 10% per year), it seems that the stock’s performance has improved lately. Given that the stock price momentum remains strong, it might be worth taking a closer look at the stock lest you miss an opportunity. While it’s worth considering the various impacts that market conditions can have on the stock price, there are other, even more important factors. Take risks, for example – White Mountains Insurance Group has 2 warning signs (and 1 which cannot be ignored) we think you should know.

We’ll like White Mountains Insurance Group better if we see big insider buying. In the meantime, watch this free list of growing companies with significant and recent insider buying.

Please note that the market returns quoted in this article reflect the average market-weighted returns of stocks currently trading on US exchanges.

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Find out if White Mountains Insurance Group is potentially overvalued or undervalued by viewing our full analysis, which includes fair value estimates, risks and warnings, dividends, insider trading and financial health.

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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.