U.S. Markets closed

The Cosan (NYSE:CZZ) Share Price Has Gained 100%, So Why Not Pay It Some Attention?

Simply Wall St

The most you can lose on any stock (assuming you don't use leverage) is 100% of your money. On the other hand, if you find a high quality business to buy (at the right price) you can more than double your money! For example, the Cosan Limited (NYSE:CZZ) share price had more than doubled in just one year - up 100%. It's also good to see the share price up 15% over the last quarter. It is also impressive that the stock is up 82% over three years, adding to the sense that it is a real winner.

View our latest analysis for Cosan

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. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

During the last year Cosan grew its earnings per share (EPS) by 88%. We note that the earnings per share growth isn't far from the share price growth (of 100%). That suggests that the market sentiment around the company hasn't changed much over that time. We don't think its coincidental that the share price is growing at a similar rate to the earnings per share.

You can see below how EPS has changed over time (discover the exact values by clicking on the image).

NYSE:CZZ Past and Future Earnings, October 24th 2019

It is of course excellent to see how Cosan has grown profits over the years, but the future is more important for shareholders. Take a more thorough look at Cosan's financial health with this free report on its balance sheet.

What about the Total Shareholder Return (TSR)?

We've already covered Cosan's share price action, but we should also mention its total shareholder return (TSR). Arguably the TSR is a more complete return calculation because it accounts for the value of dividends (as if they were reinvested), along with the hypothetical value of any discounted capital that have been offered to shareholders. Cosan's TSR of 100% for the year exceeded its share price return, because it has paid dividends.

A Different Perspective

It's good to see that Cosan has rewarded shareholders with a total shareholder return of 100% in the last twelve months. Of course, that includes the dividend. That gain is better than the annual TSR over five years, which is 11%. Therefore it seems like sentiment around the company has been positive lately. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Is Cosan cheap compared to other companies? These 3 valuation measures might help you decide.

We will like Cosan 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 US exchanges.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.