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Should FSA Group (ASX:FSA) Be Disappointed With Their 19% Profit?

Simply Wall St

The main point of investing for the long term is to make money. Better yet, you'd like to see the share price move up more than the market average. Unfortunately for shareholders, while the FSA Group Limited (ASX:FSA) share price is up 19% in the last five years, that's less than the market return. Over the last twelve months the stock price has risen a very respectable 15%.

Check out our latest analysis for FSA Group

To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.

Over half a decade, FSA Group managed to grow its earnings per share at 1.3% a year. This EPS growth is lower than the 3.6% average annual increase in the share price. This suggests that market participants hold the company in higher regard, these days. That's not necessarily surprising considering the five-year track record of earnings growth.

The graphic below depicts how EPS has changed over time (unveil the exact values by clicking on the image).

ASX:FSA Past and Future Earnings, December 5th 2019

We know that FSA Group has improved its bottom line lately, but is it going to grow revenue? Check if analysts think FSA Group will grow revenue in the future.

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. As it happens, FSA Group's TSR for the last 5 years was 54%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return.

A Different Perspective

FSA Group provided a TSR of 20% over the year (including dividends) . That's fairly close to the broader market return. That gain looks pretty satisfying, and it is even better than the five-year TSR of 9.1% per year. It is possible that management foresight will bring growth well into the future, even if the share price slows down. Before spending more time on FSA Group it might be wise to click here to see if insiders have been buying or selling shares.

We will like FSA Group 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 AU 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.