By buying an index fund, investors can approximate the average market return. But if you choose individual stocks with prowess, you can make superior returns. For example, Yandex N.V. (NASDAQ:YNDX) shareholders have seen the share price rise 83% over three years, well in excess of the market return (37%, not including dividends). On the other hand, the returns haven't been quite so good recently, with shareholders up just 2.6%.
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.
Yandex was able to grow its EPS at 77% per year over three years, sending the share price higher. This EPS growth is higher than the 22% average annual increase in the share price. So one could reasonably conclude that the market has cooled on the stock.
The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers).
We know that Yandex has improved its bottom line over the last three years, but what does the future have in store? If you are thinking of buying or selling Yandex stock, you should check out this FREE detailed report on its balance sheet.
A Different Perspective
Yandex provided a TSR of 2.6% over the last twelve months. Unfortunately this falls short of the market return. If we look back over five years, the returns are even better, coming in at 4.9% per year for five years. It may well be that this is a business worth popping on the watching, given the continuing positive reception, over time, from the market. Before deciding if you like the current share price, check how Yandex scores on these 3 valuation metrics.
We will like Yandex 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 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. Thank you for reading.