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Does Valmont Industries's (NYSE:VMI) Share Price Gain of 35% Match Its Business Performance?

Simply Wall St

If you want to compound wealth in the stock market, you can do so by buying an index fund. But if you pick the right individual stocks, you could make more than that. To wit, the Valmont Industries, Inc. (NYSE:VMI) share price is 35% higher than it was a year ago, much better than the market return of around 28% (not including dividends) in the same period. If it can keep that out-performance up over the long term, investors will do very well! The longer term returns have not been as good, with the stock price only 2.0% higher than it was three years ago.

View our latest analysis for Valmont Industries

There is no denying that markets are sometimes efficient, but prices do not always reflect underlying business performance. 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.

Valmont Industries was able to grow EPS by 91% in the last twelve months. It's fair to say that the share price gain of 35% did not keep pace with the EPS growth. So it seems like the market has cooled on Valmont Industries, despite the growth. Interesting.

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

NYSE:VMI Past and Future Earnings, December 19th 2019
NYSE:VMI Past and Future Earnings, December 19th 2019

We know that Valmont Industries has improved its bottom line lately, but is it going to grow revenue? You could check out this free report showing analyst revenue forecasts.

What about the Total Shareholder Return (TSR)?

We've already covered Valmont Industries's share price action, but we should also mention its total shareholder return (TSR). The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Dividends have been really beneficial for Valmont Industries shareholders, and that cash payout contributed to why its TSR of 36%, over the last year, is better than the share price return.

A Different Perspective

It's nice to see that Valmont Industries shareholders have received a total shareholder return of 36% over the last year. Of course, that includes the dividend. That's better than the annualised return of 4.0% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. Before spending more time on Valmont Industries it might be wise to click here to see if insiders have been buying or selling shares.

If you would prefer to check out another company -- one with potentially superior financials -- then do not miss this free list of companies that have proven they can grow earnings.

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 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.

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.