Unless you borrow money to invest, the potential losses are limited. But when you pick a company that is really flourishing, you can make more than 100%. For example, the Costamare Inc. (NYSE:CMRE) share price has soared 115% return in just a single year. It's also good to see the share price up 49% over the last quarter. Also impressive, the stock is up 65% over three years, making long term shareholders happy, too.
While the efficient markets hypothesis continues to be taught by some, it has been proven that markets are over-reactive dynamic systems, and investors are not always rational. 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.
Costamare was able to grow EPS by 122% in the last twelve months. We note that the earnings per share growth isn't far from the share price growth (of 115%). This makes us think the market hasn't really changed its sentiment around the company, in the last year. We don't think its coincidental that the share price is growing at a similar rate to the earnings per share.
You can see how EPS has changed over time in the image below (click on the chart to see the exact values).
We know that Costamare has improved its bottom line lately, but is it going to grow revenue? This free report showing analyst revenue forecasts should help you figure out if the EPS growth can be sustained.
What About Dividends?
When looking at investment returns, it is important to consider the difference between total shareholder return (TSR) and share price return. 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. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for Costamare the TSR over the last year was 130%, which is better than the share price return mentioned above. This is largely a result of its dividend payments!
A Different Perspective
We're pleased to report that Costamare shareholders have received a total shareholder return of 130% over one year. And that does include the dividend. There's no doubt those recent returns are much better than the TSR loss of 6.2% per year over five years. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. Importantly, we haven't analysed Costamare's dividend history. This free visual report on its dividends is a must-read if you're thinking of buying.
But note: Costamare may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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. Thank you for reading.